ORAL ANSWERS TO QUESTIONS

DEFENCE

The Secretary of State was asked—

Cadet Forces

Stephen Mosley: what steps his Department is taking to increase the number of cadet forces in the UK.

Jessica Lee: what steps his Department is taking to increase the number of cadet forces in the UK.

Mark Francois: As announced by the Prime Minister and Deputy Prime Minister on Armed Forces day, the Department for Education and the Ministry of Defence are working together to enable 100 more state-funded schools to have cadet units by 2015. The extra cadet units will be formed through partnerships with existing units, or by self-standing new units, both using third-party sponsorship funding. The departments have identified £10.85 million to meet the programme’s training and equipment costs. More than 50 schools have already registered their interest, and the joint departmental team, supported by the reserve forces and cadets associations, will work with schools to develop the most appropriate cadet option for them.

Stephen Mosley: I welcome my right hon. Friend’s answer. I recently had the pleasure of attending my local sea cadets, TS Deva, which like other sea cadet groups does not receive much financial assistance from the Ministry of Defence. Has my right hon. Friend considered whether the MOD could provide more support to sea cadets?

Mark Francois: I commend my hon. Friend for supporting the cadet movement in his constituency, which I am sure will be genuinely grateful for his support. Sea Cadets receives financial assistance from the Ministry of Defence, and as part of the memorandum of understanding it received £8 million as grant in aid from the Royal Navy. It also raises money from trusts and legacies and through fund raising events locally and more widely. We wish it every success in its endeavours.

Jessica Lee: In my constituency of Erewash we are lucky enough to have fine cadets across all the armed forces, learning skills and providing exemplary services to the community. Does my right hon. Friend agree that the best way of promoting cadets is to support the community work they undertake across the country?

Mark Francois: I am happy to agree with my hon. Friend’s assertion. Activities such as those offered by the cadets and inviting armed service leaders into the classroom help to instil qualities such as confidence, self-discipline and responsibility, while developing team work and leadership skills. Experience from the military and education sectors has demonstrated how those core values can help pupils reach their academic potential and become well rounded and accomplished adults, fully prepared for life beyond school. The Government very much encourage the movement, and I am grateful that my hon. Friend gives it her personal support.

Nick Brown: I support the Minister in what he is trying to do and draw his attention to the excellent work carried out at Walker Technology college and Heaton Manor school in my constituency. Is a core problem the way in which the BTEC in uniformed public services counts towards the evaluation of state-funded schools more generally? I know the Education Secretary is aware of that problem, and it will have to be overcome if cadet forces are to flourish in state schools.

Mark Francois: The right hon. Gentleman knows that part of the new programme of expansion is deliberately aimed at state schools—I take it he welcomes that. I take on board the point about the BTEC. I recently met Lord Hill, the Under-Secretary of State at the Department for Education, to discuss how we can further increase the cadet movement in schools, and when we next meet I will ensure the issue is on the agenda. It would be helpful if the right hon. Gentleman and some of his colleagues used their links with the trade union movement to ensure the fullest possible participation among trade unions in helping to support cadet units.

Mary Glindon: Will the Minister join me in congratulating the air cadets of 2344 (Longbenton) Squadron on being made the Newcastle Evening Chronicle’s children and young people’s champion 2012 for their outstanding work with young people? Does the success of that exemplary cadet squadron show how important it is for the Minister to increase the number of cadet forces across all our communities?

Mark Francois: I am glad to add congratulations from the Dispatch Box to those of the hon. Lady, and I hope they will appear prominently in her local newspaper. She might be aware that the cadet movement has more than 140,000 members, of whom at latest count 35,700 are members of the Air Training Corps. As the House has heard, the Government are trying to increase those numbers further because we appreciate the values that cadets bring to our society.

Afghanistan

Rehman Chishti: What assessment he has made of likely UK military commitments in Afghanistan in 2015.

Jack Lopresti: What assessment he has made of likely UK military commitments in Afghanistan in 2015.

Philip Hammond: The UK and the international community are committed to Afghanistan for the long term. As part of our enduring legacy in Afghanistan, UK troops will support the continuing development of the Afghan national security forces by mentoring trainers at the Afghan national army officer academy. In addition, it is likely that some troops will remain in a non-combat role after the end of 2014 to complete the recovery of our equipment. Beyond that, no decisions have yet been made about any longer-term UK mission in Afghanistan, but detailed planning with NATO and other allies is ongoing. We are clear, however, that we will not be involved in a combat role after 31 December 2014.

Rehman Chishti: Will the post-2014 strategy also see an end to drone strikes in Afghanistan?

Philip Hammond: Speaking for the United Kingdom, it is not our intention to remain in a combat role after the end of 2014. That would include combat drone strikes.

Jack Lopresti: Does my right hon. Friend agree that international support for Afghanistan beyond 2014 must be sufficient to send a clear message to insurgents that they cannot wait us out?

Philip Hammond: There are two audiences in this matter: the Afghan national security forces, to whom we need to send a clear signal that they will have the continuing support of the international community as they take over responsibility for security in their own country, and the Taliban—the insurgents—who need to understand that they cannot simply adopt a policy of trying to wait us out, and that we will not abandon Afghanistan but will support it as it takes over responsibility for its own security and for containing the insurgency beyond the end of 2014.

Bob Ainsworth: Will the Secretary of State join me in congratulating 12th Mechanized Brigade on the degree of transition that it achieved over the summer? He will know that it will be marching to Parliament later today. How far we are down the road to the total transition that we need to achieve by the end of 2014, and what impact is the current spate of “green on blue” attacks having on our ability to carry out that transition?

Philip Hammond: I am happy to join the right hon. Gentleman in congratulating 12 Mechanized Brigade on the considerable advances that have been made over the past six months. For all that we read in the media, and for all the siren voices attempting to tell us something different, the evidence on the ground is that steady progress is being made. Incidents of violence continue but are increasingly outside the population centres, and life in much of Helmand is increasingly returning to normal, with bazaars reopening, schools operating and health centres being constructed. Of course, the current spate of green on blue attacks has a significant impact, but I am confident that we will not allow it to deter us from our mission.

Paul Flynn: The Royal United Services Institute reported in September, after it had met some senior Taliban people, that the Taliban were prepared to do a deal for the continuing presence of American troops after 2014, but not prepared to do a deal with Karzai because they regard him as weak and corrupt. That would mean a return to Taliban rule in parts of Afghanistan. What is the Secretary of State doing to prepare the British public for that eventuality?

Philip Hammond: The hon. Gentleman will know, having been present at most of these exchanges, that in the 13 months for which I have been in this job I have repeatedly said that although the military dimension is important, a lasting solution in Afghanistan necessarily involves political reconciliation. As we in this country know perhaps more than anyone else in the world, reconciliation in war-torn, strife-torn countries invariably
	means some compromise with the people we have been fighting. There will have to be a compromise in Afghanistan if we are to get a sustainable solution.

Patrick Mercer: Further to the question asked by the right hon. Member for Coventry North East (Mr Ainsworth), the Secretary of State has already reflected on the ugly and demoralising nature of so-called “green on blue” attacks. What else can be done to minimise them over the years that lie ahead?

Philip Hammond: Our commanders on the ground have already taken a significant number of steps to reduce the risk of “green on blue” attacks—to reduce the number of opportunities for the perpetration of such attacks. As we go through the cycle of transition, we will expect there to be mentoring and assistance at increasingly higher levels of command. There will be fewer and fewer instances of mentoring at tolay and even kandak level as the situation proceeds, which will in itself reduce the opportunities for such attacks.

Joint Strike Fighter

Diana Johnson: How many joint strike fighter jets his Department plans to procure.

Philip Dunne: The UK took delivery of its first joint strike fighter aircraft in July and its second in October, both of which are both operating from Eglin air force base in Florida, where they are undergoing operational testing. A third aircraft is due in the second quarter of 2013. Decisions on the overall order for joint strike fighters will not be made until the strategic defence and security review in 2015.

Diana Johnson: When will the Minister be able to tell the House precisely how much the Government’s U-turn to procure the F-35B rather than the F-35C, which the SDSR committed to, will cost the taxpayer?

Philip Dunne: The hon. Lady should recognise that the decision to change the configuration of the aircraft carriers and the aircraft operating on them will save the taxpayer money.

Ben Wallace: The previous Government entered into the joint strike fighter agreement without securing the source access code to allow British manufacturers to make British products for our planes without having to go via the American prime contractor. Will the Minister update the House on what progress has been made in acquiring the very important source data?

Philip Dunne: My hon. Friend is well aware that the arrangements entered into whereby the UK became a tier-1 partner in the JSF programme mean that 15% of the aircraft’s components are manufactured in this country, securing more than 25,000 jobs.

Reserve Forces

Julie Hilling: What recent progress he has made on enabling businesses to employ members of the reserves.

Nadhim Zahawi: What support he has received from major employers for the proposals set out in his reserves Green Paper.

Mark Francois: The Government are fully committed to delivering reserve forces that are integral to and integrated with the regular forces, and we are investing an additional £1.8 billion over the next 10 years to meet that aim. Our aspirations, as set out in the “Future Reserves 2020” Green Paper, will require a closer relationship with employers, based on partnering and on giving greater predictability and certainty to the employer, the reservist and the Ministry of Defence.

Julie Hilling: What specific support have the Government put in place for small and medium-sized enterprises to employ reservists, given that SMEs will face the greatest struggle to achieve this?

Mark Francois: When we mobilise a reservist we already provide financial assistance to employers, to help both with recruiting an additional employee and to pay some marginal additional costs for their employment in certain circumstances. We are examining this area extremely closely in the context of the Green Paper and if we have further proposals to announce to strengthen things even further, we will make them plain in the White Paper in the spring of next year.

Nadhim Zahawi: What additional cash support will be targeted at SMEs?

Mark Francois: I have told the House that we provide some financial support to employers when we mobilise a reservist. We are examining this closely in the context of the Green Paper, but I encourage my hon. Friend to submit any specific suggestions to the Green Paper process. I should also add that companies such as BT, Carillion, Serco, the Automobile Association and BAE Systems have shown their support to our reservists in the consultation process, but clearly we would like to see more contributions from SMEs, too.

Kevan Jones: Earlier this year, the Government announced quite radical changes to our reserve forces. I understand that the recruitment campaign has already begun. What confidence does the Minister have that those recruited will have their employment rights protected without a change in the law? Will he update us on where the Department is with the review of Defence Estates?

Mark Francois: I take a close interest in this matter. I spent the best part of a day at Army HQ last week going in detail through proposals to increase the size of the reserve forces. We are considering the issue extremely closely. The Green Paper asks employers and others whether we might need primary legislation to change some of the terms, but as the consultation has only just begun it is perhaps a little rich of the hon. Gentleman to ask me what the answer is.

Departmental Contracts

Gordon Henderson: What steps he is taking to enable small and medium-sized enterprises to bid for procurement contracts with his Department.

Philip Dunne: As set out in the White Paper published earlier this year, increasing opportunities for SMEs in defence procurement is an important strand in our open procurement policy. We have set up an SME forum, which I chair, precisely to identify barriers to participation. Specific measures include standardising and simplifying procurement systems, promoting opportunities for SMEs through e-procurement mechanisms and marketplace events, and working with our prime contractors to boost opportunities for smaller businesses in the supply chain.

Gordon Henderson: I welcome that statement. I was a senior contracts officer with GEC Marconi Avionics, so I would like to think I know something about the complexity of the MOD procurement process. Large companies such as BAE Systems have access to teams of expert contracts officers who can plough through the bid documents. Sadly, SMEs often do not have that luxury, which puts them at a disadvantage. Will my hon. Friend consider how the bid process can be made less complicated and more user-friendly for SMEs?

Philip Dunne: I am grateful to my hon. Friend for demonstrating his expertise and bringing it to bear on our complicated procurement processes. We recognise that smaller companies, unlike the larger ones, do not have the resources to focus on putting bid proposals together, which is why we are introducing a number of measures to make that easier for them. They include publishing on web portals all tenders over £10,000, streamlining contract processes and speeding up invoice and bill payment systems, which will make it more convenient for SMEs to receive timely payments. We are also considering requests for interim payments on procurement.

Angus Robertson: According to the MOD’s own statistics, only 2% of SME contracts are given to Scottish companies. Meanwhile, the new Defence Business Services organisation is set to have 1,672 members of staff, only 13 of whom will be in Scotland. Is the Minister not embarrassed by that track record?

Philip Dunne: The hon. Gentleman might be interested to know that I will be in Scotland on Wednesday evening to meet defence contractors precisely to encourage them to participate more in the procurement that is on offer.

Peter Luff: The Minister has explained to the House how much has been done to make it easier for smaller businesses to do business with the MOD. One outstanding action item is publication of the audited equipment programme. A month ago, the Secretary of State told me that it would be published “shortly”. How shortly is “shortly”?

Philip Dunne: I pay tribute to my predecessor for his work in championing the role of SMEs in defence procurement. As far as his direct question is concerned, as he knows the equipment plan is with the National Audit Office, and as soon as it has finished its deliberations the Department will publish it, alongside the NAO’s review.

Jim Murphy: SMEs will be affected by any decision by BAE Systems to shut any of its three yards in Portsmouth, Scotstoun or Govan. Will the Minister update the House on behalf of the businesses and workers in Glasgow who want to know whether, if they were in an independent Scotland, they could compete for work on Royal Navy warships? Will he also update the House to address the concerns of SMEs and workers in Portsmouth who will want to know about any future order of two offshore patrol boats that could fill any production gap?

Philip Dunne: The shadow Secretary of State is well aware that under EU procurement rules any nation can direct warlike stores, such as large warships, to be built within its national boundaries. That would mean that in the very unlikely event of a Scottish independence vote leading to an independent Scotland, a new Scottish Government could place orders for Scottish warships to be built in Scottish yards, whereas the residual UK Government could direct warships to be built in their own yards, if they decided to take advantage of the EU exemption. As far as Portsmouth is concerned, the terms of business agreement entered into by the previous Government left the decisions about how the company should rationalise the ship building programme for another day. Having placed large orders that would run beyond the general election, they were not prepared to take tough decisions on what should happen to consolidate the industry.

Operation Atalanta

John Glen: What assessment he has made of the success of Operation Atalanta.

Andrew Murrison: Operation Atalanta is one of three multinational counter-piracy operations in the Indian ocean that have played an important role in the dramatic reduction in piracy observed over the past 12 months. Operation Atalanta assesses that there are now only five vessels and around 140 hostages held captive off the Somali coast. That compares favourably with May 2011, when there were believed to be 23 vessels and about 500 hostages being held.

John Glen: I thank my hon. Friend for that answer. Deterring piracy at sea is essential, but it addresses the symptoms, not the causes, of Somali criminal activity. Will he commit the Government to tackling the deeper political causes by supporting the parallel EUCAP NESTOR mission on the ground in Somalia?

Andrew Murrison: My hon. Friend is right that the piracy will not be resolved entirely at sea, and EUCAP NESTOR is showing early promise of delivering effect. The subject will be returned to at the next EU Foreign Affairs Council early next year. I pay tribute to the EU training mission in Somalia, which is showing early promise and already training people to ensure that we tackle this problem at its heart and do not rely simply on our undoubted success offshore.

Andrew Gwynne: But what assessment has the Minister made of the links between al-Shabaab and piracy in the region, and what
	are the Government’s long-term plans to tackle the growth of extremism operating both within and out of Somalia?

Andrew Murrison: We have seen some early signs of improvement politically and economically in Somalia. It is absolutely essential that the root causes of insurgency are dealt with at source, and that is happening. The international community is absolutely committed to dealing with this and tackling the menace that al-Shabaab poses.

European Defence Co-operation

Nick Harvey: What assessment he has made of the scope for improved European defence co-operation.

Andrew Murrison: We believe that there is scope for improved European defence co-operation focused strongly on supporting operational effect and capability. We would encourage closer co-operation through either multilateral or bilateral initiatives, such as the UK-France Lancaster House treaty signed in 2010. That is becoming increasingly important as nations face reductions in their defence budgets.

Nick Harvey: I commend the Minister for his participation in the European Defence Council last week and welcome the subsequent announcements on pooling capabilities, helicopter training and air-to-air refuelling, but with America rebalancing its defence away to the Pacific what is the future of UK involvement in the European Defence Agency?

Andrew Murrison: The United Kingdom stood alone last Monday in insisting on flat cash for the European Defence Agency. I am very pleased that we did so, as we have been forced, because of the deficit we inherited, to make fairly substantial cuts to the defence budget and it would have been perverse to vote through an increase in the EDA budget. It is absolutely crucial that the EDA takes every opportunity to ensure that it extracts efficiencies from its programmes, and it will have our support in levering in effect, but the emphasis must be on effect and capability, not institution building.

Gregg McClymont: On European defence co-operation, the Minister will be aware that the separatists in Scotland have recently announced that they would wish a separate Scotland to join NATO at the same time as getting rid of Scotland’s nuclear weapons—a very difficult thing to achieve. Is he aware of any discussions between the Scottish Government and NATO?

Andrew Murrison: I think that it would be premature for the Scottish Government to engage with NATO, as I confidently expect the good people of Scotland—people of sound good sense—to reject independence at the forthcoming referendum.

Michael Fabricant: Following the successful deployment of Iron Dome and the trials of David’s Sling, what discussions has the European Defence Agency had with Israel regarding procurement of those two vital tools?

Andrew Murrison: It is important to stress that NATO is the cornerstone of our collective defence. I know that my hon. Friend would agree with that, but it is also important for the European Union to ensure that it engages with what might be called its near abroad. Colleagues—defence Ministers—across the EU keep a very close eye on developments.

Russell Brown: One of the objectives of the UK-France defence accord was the potential jointly to develop a new unmanned combat air vehicle. Has agreement been reached with France on its development, and if not what is causing the delay?

Andrew Murrison: I thank the hon. Gentleman for his question. We have agreed the assessment phase, which is under way, and we will have further to report in the fullness of time. I am very pleased that he raises the important liaison that we now have with France. I pay tribute to my right hon. Friend the Member for North Somerset (Dr Fox) for securing that in 2010 and for the two Lancaster House treaties that we now have with France. I look forward to ever closer co-operation with France, noting of course that France spends a proper amount on defence; we would like other European colleagues to follow suit.

Combat Immunity

Joan Walley: What his policy is on combat immunity; and if he will make a statement.

Andrew Robathan: Combat immunity is an important legal principle that the MOD is committed to defend. The courts have consistently held that a soldier involved in combat or under an immediate threat should be able to focus on the task of fighting. Constant assessment of personal liability on the battlefield could lead to paralysis across the chain of command and result in military failure and increased loss of life through operational inefficiency. Imposing a duty of care in those circumstances is not appropriate and would reduce operational effectiveness. However, there is a recognised mechanism to compensate for injury or death under existing statutory schemes.

Joan Walley: Does the Minister agree, though, that the MOD’s decision not to make a further appeal against the ruling of the Court of Appeal in the case of the late Corporal Stephen Allbutt—I pay tribute to his widow’s courage—is a landmark in respect of combat immunity? Given that the clear consequences of that ruling are that the MOD owes a duty of care properly to equip its troops when they go into battle, does the Minister agree that an urgent review of procurement and training—never mind statutory schemes—is needed in the interests of the safety and morale of our armed forces?

Andrew Robathan: You will understand, Mr Speaker, that it would be inappropriate of me to comment on any ongoing legal procedures. The hon. Lady should realise, however, that we are absolutely committed to defending the position of combat immunity. It would be very worrying if soldiers, sailors and airmen in battle were
	concerned about looking over their shoulders the whole time for fear of legal challenge. Of course we wish people to be properly trained and properly equipped; we are determined that that should happen and we believe that they are so.

Andrew Bridgen: What legal advice is provided to battlefield commanders to make sure that they fully appreciate their obligations?

Andrew Robathan: All battlefield commanders of whatever rank are given appropriate training and advice on the legal position, from the Geneva convention onwards, and on training with equipment and the like.

Afghanistan

Dan Jarvis: What recent progress there has been on security transition in Afghanistan.

Philip Hammond: Transition of security to Afghan control, as agreed at the Lisbon conference in 2010, remains on track to be achieved by the end of 2014. The Afghan national security forces are taking an ever greater role in their domestic security. They now have lead responsibility in areas that are home to three quarters of the population, including all 34 provincial capitals and the three districts that make up Task Force Helmand’s area of operations. We expect that by mid-2013 all parts of the country will have entered the process and that Afghan security forces will be in the lead for security nationwide. The progress of security transition will allow ISAF, gradually and responsibly, to draw down its forces to complete its combat mission by 31 December 2014.

Dan Jarvis: I thank the Secretary of State for that response. He will know that, to date, not one senior official or political figure in Afghanistan has been successfully prosecuted for corruption or other abuses, despite the many major scandals that have taken place. Does he agree that governance and the rule of law will be more, rather than less, critical to progress in Afghanistan after the security transition, and how does he propose to ensure that it is at the heart of our engagement post-2014?

Philip Hammond: I am glad to be able to say that I absolutely endorse the hon. Gentleman’s view. As I said a moment ago, what happens in the military space is only one part of the overall equation. There needs to be political reconciliation, progress on building good governance, particularly on the eradication of the extreme corruption that is still prevalent in Afghanistan, and progress on developing relationships with Afghanistan’s neighbours.

Philip Hollobone: Given the limited capacity of the RAF airbridge and the difficulty of transporting stuff overland to seaports in Pakistan, how much equipment do we expect to leave behind when we finally exit Afghanistan?

Philip Hammond: Our intention is to extract all equipment whose value to the armed forces is greater than the cost of extraction and recuperation. We hope to be able to use the southern route overland via Pakistan and we are
	also negotiating northern lines of communication through Uzbekistan, Kazakhstan and Russia, but in extremis we have the capacity to bring equipment out by air.

Derek Twigg: One of the key factors in ensuring a secure Afghanistan is, of course, the position of Pakistan, whose security services have given help to the insurgents and the Taliban over recent years. Will the Secretary of State update the House on what he thinks the latest position is with regard to the help and support given to the Taliban and insurgents by Pakistan’s intelligence services?

Philip Hammond: I am glad to say that relationships between Afghanistan and Pakistan are improving significantly. The recent visit of the High Peace Council to Islamabad marked an important step forward in building collaborative relationships in the region. Both countries understand the threat that the Taliban and other insurgent organisations pose to their security, as well as the benefits of collaboration in dealing with that threat. We are making significant progress, but the hon. Gentleman will know that Pakistan is not a simple country, that the situation is complex and that the issue will require a lot of effort for many years to come.

Tobias Ellwood: The Secretary of State will be aware that British troops preparing for deployment to Afghanistan undertake important training at the British base in Laikipia in Kenya. Will he join me in paying tribute to those who make sure that those troops receive the necessary training for Afghanistan? Will he also look into the absence of navigation aids at Laikipia air base, which means that British troops are prevented from flying directly to the training area and instead have to travel the long route via Nairobi?

Philip Hammond: I will indeed join my hon. Friend in paying tribute to those who make possible that valuable training facility in Kenya. He has raised an issue that I was not previously aware of; I will look into it and write to him.

Libya

David Ruffley: What estimate he has made of the cost of UK military intervention in Libya.

Andrew Murrison: We currently estimate the net additional cost of Operation Ellamy at £199 million.

David Ruffley: I thank the Minister for that reply. After the first Gulf war, Her Majesty’s Government recovered £2 billion from Kuwait and other countries to help to cover the cost of our operations there. Is he able to tell us that the Secretary of State will be unyielding in his demands of the oil-rich Libyan Government to help to cover the £200 million cost underwritten by the British taxpayer for the Libyan intervention?

Andrew Murrison: I thank my hon. Friend for his question; I know that he takes a deep interest in these matters. It is important to emphasise that Libya’s security is our security, and this was a mandated operation. We will
	not seek to recover costs from Libya; that would not be the correct course of action. I look forward to Libya rejoining the international community of nations and to the UK and Libya proceeding on that basis.

Luciana Berger: What assessment has the Minister made of the security of UK staff in our diplomatic buildings in Libya following the attack on the US embassy?

Andrew Murrison: That is primarily a matter for the Foreign Office, but I will try to reassure the hon. Lady. When I was in Tripoli recently, I visited UK staff, both uniformed and civilian. We have a small presence of staff embedded in the interim Government to assist them. Our staff are, of course, protected according to the risk assessment on the ground.

12th Mechanized Brigade

James Gray: Whether he has met the commander of 12th Mechanized Brigade following its return from Afghanistan.

Andrew Robathan: My right hon. Friend the Secretary of State for Defence met the commander of 12th Mechanized Brigade, Brigadier Doug Chalmers, during his last visit to Afghanistan in September. On 23 October, the Secretary of State and I were pleased to meet the commander in Parliament when he briefed both Houses and all parties on the brigade’s deployment on Operation Herrick 16.

James Gray: I hope that the Minister for the Armed Forces, other Ministers and all Members of the House are aware that some 20 minutes from now, there will be another opportunity to meet Brigadier Doug Chalmers and the 120 soldiers of 12th Mechanized Brigade as they march, led by the band of the Grenadier Guards, through the gates of Parliament and down to the north door of Westminster Hall. As we welcome them, I hope that hon. Members will remember not only those who have not come home with the brigade, but those who have come home with life-changing injuries and the families who support our soldiers, sailors and airmen as they go off to operations in Afghanistan.

Andrew Robathan: I pay tribute to my hon. Friend for setting up the march-ins at Parliament. They are a valuable and tangible sign of the respect that we owe our armed forces when they go to war on our behalf. He has done a great deal to organise them. I share his sentiments about those who have not returned, the families of the bereaved and those who have come back with life-threatening illnesses. I shall be at the march-in at some stage this afternoon or this evening, and the Secretary of State hopes to be there as well.

Mr Speaker: I shall be here, but I hope that the hon. Member for North Wiltshire (Mr Gray) will pass on my respect and appreciation, which I would have preferred to convey in person.

Toby Perkins: I echo the Minister’s comments on the massive contribution of 12th Mechanized Brigade.
	I recognise what the Secretary of State has just said about the importance of the message that we send to the Taliban and the Afghan army, but what message will be sent by the reduction in the size of the Afghan army in respect of the security of Afghanistan?

Andrew Robathan: The total size of the Afghan national security forces is approaching 352,000. It is for Afghanistan to make decisions for the future. We continue to support the democratically elected Government of Afghanistan, as do the Opposition.

Defence Equipment and Support

Iain Wright: What plans he has for the future of Defence Equipment and Support; and if he will make a statement.

Philip Dunne: Our evaluation of how best to improve the delivery of procurement and support is progressing well. A soft market testing of the potential for a Government-owned contractor-operated model is due to conclude before Christmas, and the outcome of the value-for-money comparison is expected shortly. Subject to those conclusions, we are on track to make decisions on how we intend to proceed in the new year. In the meantime, we continue to drive efficiency and improvements within Defence Equipment and Support.

Iain Wright: Defence procurement is a key part of an active industrial strategy. Defence firms need certainty to plan and invest for the long term. There has been far too much uncertainty over the future shape and direction of Defence Equipment and Support. Notwithstanding what the Minister has said, the position is still vague, with promises made about the new year. Will he provide further clarity and, in so doing, help British businesses to invest for the long term?

Philip Dunne: The single most effective answer to the hon. Gentleman’s question is that this Government have removed the overspend in the defence equipment budget that we inherited from Labour. By narrowing the spend for the next 10 years into a £160 billion envelope, it is now clear that some 95% of that money is committed and the contractors know that the programmes will be delivered. That was not the case under the previous Government.

Alison Seabeck: The success of the future structure of Defence Equipment and Support lies at the heart of our ability to deliver Future Force 2020. The concerns raised by the industry about exactly how a Government-owned, contractor operated model would work therefore need to be taken seriously. The Minister’s predecessor, the hon. Member for Mid Worcestershire (Peter Luff), also highlighted the delay to the announcement on the equipment programme. My hon. Friend the Member for Hartlepool (Mr Wright) was absolutely right about the Department for Business, Innovation and Skills perspective—it is vital that the defence sector has certainty. Will the Minister undertake to come to the House at the earliest possible opportunity in the new year to set out the detail of the GOCO model and give us a definitive list of the projects that will be overseen by it?

Philip Dunne: I thank the hon. Lady for her question. This Government are engaging with industry more proactively than has been the case in recent times. We have just announced the defence growth partnership in conjunction with the Department for Business, Innovation and Skills to drive forward how we support defence contractors in growing the economy in this country. Once we have made the decision, we will make an announcement to Parliament in the usual way.

Armed Forces Pensions

Caroline Nokes: What comparative assessment he has made of the value and terms of armed forces pensions and other public sector pensions.
	The Minister of State, Ministry of Defence (Mr Mark Francois): There are currently two armed forces pension schemes in operation, known as armed forces pension scheme 75 and armed forces pension scheme 05. These are due to be superseded in 2015 by what is currently referred to as the future armed forces pension scheme. That scheme was born out of the recommendations of Lord Hutton’s independent public service pension commission report.

Caroline Nokes: As a member of the armed forces parliamentary scheme, I often have the opportunity to discuss pension provision with serving members of the armed forces. Surprisingly, not only those coming to the end of their term of service but young soldiers too raise the issue. What steps are being taken better to communicate to service personnel the future terms and conditions of their pensions?

Mark Francois: When I was in Camp Bastion two weeks ago for the Remembrance celebrations, I had the pleasure of meeting a dozen or so regimental sergeant majors, who impressed upon me—at close range, shall we say?—a number of questions about pensions. Perhaps I could help to reassure them and my hon. Friend. John Moore-Bick, who heads the Forces Pension Society, which is expert on this matter, has said that the new pension scheme is
	“as good as it gets”.
	We are redoubling our efforts to explain that to serving personnel, including by developing a new pensions calculator from the middle of next year, so that they can plug in all the details on how pensions will affect them and get a clear answer.

Gemma Doyle: Last week, the Secretary of State announced plans to allow serving personnel to access their pension funds early to buy a house. Will the Minister confirm that an individual who takes up that offer will therefore receive lower pension payments in future?

Mark Francois: Lord Hutton’s report confirmed that the armed forces pension schemes in general stood up very well compared with others in terms of benefits to members. We should bear it in mind that, unlike many other schemes, the armed forces scheme will remain non-contributory and that the normal pension age will be lower than it is for most other schemes. Personnel will also qualify for an early payment at age 40. We are
	looking at incentives to assist servicemen to purchase their own homes. That is actively being worked on but no final decisions have been taken.

Topical Questions

Iain Stewart: If he will make a statement on his departmental responsibilities.

Philip Hammond: My first priority is, and will remain, the success of the operation in Afghanistan. Beyond that, my priority is to deliver the military tasks for which the Ministry of Defence is mandated.
	The MOD is also engaged in a major project of transformation to ensure the behavioural change needed to maintain the budget in balance and deliver the equipment programme so that our armed forces can be confident of being properly equipped and trained. With the benefit of a balanced budget to build on, we now need to focus on the future, and in particular on building the trust and confidence of the people who make up defence. Over the next few weeks, we will publish—jointly with the Foreign and Commonwealth Office—the defence engagement strategy, and I will announce the decisions emanating from the review of Army basing in the UK as we bring our troops home from Germany.

Iain Stewart: Has my right hon. Friend received any evidence from the Scottish Government on the economic and employment prospects of people in Gairloch if Scotland becomes independent and if a non-nuclear defence policy is announced?

Philip Hammond: I have received no evidence whatever, but this is not simply about people in Gairloch: the impact of the 6,000-plus jobs at Her Majesty’s naval base in Clyde is felt throughout the entire west of Scotland. The removal of those jobs or any erosion of their numbers would be a devastating blow to the Scottish economy.

Jim Murphy: The veterans interview programme aims to get private sector employers to guarantee job interviews for unemployed veterans. This scheme was designed by the Labour Opposition and is today being rolled out nationally by Jobcentre Plus. For months, Ministers have been asked to do something similar in the public sector. Will a Minister—any Minister—update the House on the progress made in getting public sector employers to guarantee job interviews to suitably qualified unemployed veterans?

Philip Hammond: I am not sure from the right hon. Gentleman’s tone whether he is pleased or saddened by the news today. He does not sound very joyous about it. The Department for Work and Pensions is rolling out a programme to ensure that veterans leaving the services are guaranteed interviews. I would have thought that he would be rather pleased about that.
	Let me make a further point. Any suggestion that people leaving the services are unable to get work would not do them any favours. More than 90% of people leaving the services have found work within six months, and more than 97% within 12 months. I would have thought that that was rather a good record to build on.

Amber Rudd: May we have an update on the Government’s policy towards Syria and a commitment that British ground troops will not be sent there?

Philip Hammond: I can tell my hon. Friend that our policy in relation to Syria remains that we believe that a diplomatic and political solution is necessary to deliver a sustainable solution to the crisis. While we pursue such a solution, we will not rule out any option that is in accordance with international law and might save innocent lives in Syria and prevent the destabilisation of a region that is of critical importance to the United Kingdom.

Kevin Brennan: Given the Government’s plans to impose the bedroom tax on the parents of serving soldiers, will the Secretary of State at least undertake to invest the Department’s forecast underspend in forces’ welfare, rather than returning it to the Treasury?

Philip Hammond: I, too, have seen speculation in the media that the Department will be underspending and returning money to the Treasury. It is our policy to operate a prudent approach to our budget, but—unlike the previous Government—it is also our policy to work closely with our colleagues in the Treasury to ensure that we deliver the equipment programme and support the armed forces in the most cost-effective way possible, and over a number of years, not just over a single year.

Stephen Mosley: Following recent international cyber-security incidents such as the Flame and Shamoon viruses, what recent steps have been taken to secure MOD systems and critical national infrastructure?

Andrew Robathan: My hon. Friend will understand that I would not wish to go too deep into security systems. What I can say is that we take the threat of cyber-attack very seriously. That applies both to the commercial world and the public sector in the UK, including defence. We are pursuing this issue with other organs of Government and we are also ensuring that we have niche capabilities within defence that can assist us in protecting against cyber-attack.

Jim McGovern: Does the Secretary of State agree that he should make an assessment of the contribution made by UK armed forces and related MOD contracts to Scotland’s economy? I am a member of the Scottish Affairs Committee and our inquiry, although not yet complete, would seem to suggest that the contribution is immense and the implications of separation would be devastating. Do any of the Ministers agree that the loss of jobs and investment is simply too high a price to pay if the MOD and UK armed forces leave Scotland?

Andrew Robathan: The hon. Gentleman will not be surprised to know that all MOD Ministers agree with what he said—not just “any” of them. Furthermore, probably all Members in the Chamber at present would agree with him.

Nick de Bois: I have had the opportunity to visit a number of living quarters as a member of the armed forces parliamentary scheme. What investment are the Government making to improve the quality of both single and family accommodation for our armed forces?

Mark Francois: I assure my hon. Friend that we take the issue of accommodation very seriously. Within a week of my appointment, I attended an Army Families Federation conference where one corporal in particular raised with me the issue of his quarters at Aldershot. Two weeks later I went to knock on his door to see them for myself. I hope that that counts as taking it seriously. We have recently put £100 million back into the budget for accommodation. We anticipate further announcements on this subject in the context of the basing review.

Gisela Stuart: In his exchanges with my hon. Friend the Member for Barnsley Central (Dan Jarvis), the Secretary of State agreed about the need to deal with corruption in Afghanistan. I understand that the first prosecutions in relation to the Kabul bank scandal are taking place. Is the Secretary of State convinced that there are any prisons in Afghanistan at the moment that would be secure enough to hold anybody convicted?

Philip Hammond: Strictly speaking, this is not a matter for the Ministry of Defence. However, the working of the Afghan justice system does concern us, not least because our normal practice until recently has been to transfer UK detainees into the Afghan justice system to allow them to them to be processed. There is a great deal of work to be done to get the Afghan justice system into a satisfactory state.

David Mowat: Some weeks ago in Prime Minister’s Question Time I raised an issue relating to my constituent Emma Hickman, whose fiancé had died in Afghanistan and who was having difficulty determining a paternity because a DNA sample had not been released by the MOD. May I first thank the Minister of State for the work he has done on this case, which is almost resolved? Will he consider asking the Army to hold DNA samples routinely for those on active duty, as happens in France and the United States?

Mark Francois: I thank my hon. Friend for his kind remarks. It has been a long journey, but I believe we are nearly there. On his wider question, it is current Ministry of Defence policy to offer all military deployable MOD civilians and other entitled personnel the opportunity to provide reference samples suitable for DNA analysis. This is entirely voluntary and is to enable identification post mortem, should that unfortunately be required. The policy is under review, and I can confirm that the United States position is being considered. I expect this work to be complete by spring 2013.

Nick Smith: The Army cadet forces outreach programme aims to reach troubled youngsters and deter them from a life of crime. Will the Secretary of State commit to expanding this programme?

Philip Hammond: We certainly support the expansion of cadet forces. Earlier, a colleague talked about the programme already in place to deliver an additional 100 cadet forces. I cannot give the hon. Gentleman a commitment at the Dispatch Box that we will be able to go beyond that, because of the resource implications. However, it is certainly something that we are reviewing all the time, with my right hon. Friend the Secretary of State for Education.

Robert Halfon: In Harlow, we are fortunate to have a strong Royal British Legion that has raised more than £45,000 for ex-servicemen so far this year. Harlow and Essex have now signed up to the Royal British Legion’s community covenant, but 200 local authorities have not done so. Will the Minister urge them to sign up today and back the Royal British Legion?

Mark Francois: I thank my hon. Friend for his question. May I take this opportunity to place on record our gratitude for everything that the Royal British Legion does in support of our servicemen and women, and of course our veterans and their families? I was in Essex when Harlow, among others, signed the community covenant. It is wonderful that more than 200 local authorities across the United Kingdom have signed the community covenant, which helps to give effect to the armed forces covenant at local government level. I recently wrote a joint letter with Sir Merrick Cockell, chairman of the Local Government Association, congratulating those councils that have signed the community covenant and gently urging those that have not to do so. We would like every local authority in the land to sign it, if possible, and that is what we are working towards.

Bill Esterson: Warm words alone are not enough when it comes to enabling small businesses to compete in the defence supply chain. Will the Minister confirm that he will take the action needed to create a level playing field, so that small businesses can compete?

Philip Dunne: The Ministry of Defence is determined to increase the participation of small and medium-sized enterprises in the supply chain. To that end, we are holding a marketplace next week, on 3 December, which the hon. Gentleman is welcome to attend, to show off the innovation coming out of our SMEs to the prime contractors.

Menzies Campbell: May I take the right hon. Gentleman back to the issue of Syria? Will he tell the House in what conceivable circumstances he would think it appropriate for British troops to intervene in a civil war?

Philip Hammond: As I have already told the House, our clear intention is to pursue a diplomatic path towards a political solution in Syria, but it makes no sense to take any options off the table in such an uncertain situation, where future developments are not yet clear.

Several hon. Members: rose—

Mr Speaker: Order. I am sorry. Colleagues know that ordinarily I like these sessions to be very full, but we have an important statement, and we must now proceed.

Bank of England

George Osborne: I would like the House of Commons to be the first to know about the future leadership of the Bank of England, and the identity of its next Governor.
	Sir Mervyn King has served as Governor with great distinction and unquestioned integrity for almost a decade, five years of which have been during the most difficult period of economic policy making of the modern age. He will continue to do his vital work until 30 June next year, and there will be opportunities then to thank him for his service to our country.
	Today’s task is to appoint his successor in good time and in good order. We have, for the first time in the history of the Bank, advertised the post, invited applications and put together an experienced panel to interview potential candidates. I want to thank my permanent secretary, Sir Nicholas Macpherson, and the chairman of the court of the Bank of England, Sir David Lees, for conducting this new, open process in a very professional way.
	I also want to thank the many individuals who put themselves forward for the job. I have myself interviewed in London all the very distinguished candidates shortlisted by the panel for the job, any one of whom would have made a good Governor. I have made my recommendation to the Prime Minister, who in turn has made the same recommendation to the Queen, and she has today approved the appointment.
	I can tell Parliament and the public that the next Governor of the Bank of England is to be Mark Carney. He is currently Governor of the central Bank of Canada and chair of the world’s Financial Stability Board. He is quite simply the best, most experienced and most qualified person in the world to be the next Governor of the Bank of England and to help steer Britain’s families and businesses through these difficult economic times.
	Britain needs the very best at a time like this, and in Mark Carney we have got him. Mr Carney is unique among the potential candidates in combining long experience of central banking, huge international credibility in economics, deep expertise in financial regulation and first-hand experience of private sector financial institutions. He is acknowledged as the outstanding central banker of his generation, and I believe he will bring the strong leadership and external experience that the Bank of England needs as it takes on its heavy new responsibilities for regulating our banking system.
	In that respect, Mr Carney will bring a fresh new perspective. During his five years as the Bank of Canada Governor, Canada was acknowledged to have weathered the economic storm better than any other major western economy. Bank bail-outs have been avoided and sustained growth has returned, and it says something of Mark Carney’s abilities and the regard he is held in that he was chosen by his fellow central bank governors and regulators around the world to be the chair of the FSB—the body tasked with strengthening and co-ordinating global financial regulation. That gives him the experience to bring better regulation to the world’s largest global financial centre here in London and other financial centres across the UK.
	Subject to the views of other members of the board, he could expect to remain chair of the FSB until 2018. While the appointment as Governor will be for eight years, Mark Carney has indicated that he intends to serve for five years and to stand down at the end of June 2018. That will align with the timing of his role at the FSB, and reflects the fact that by then he will have served for 10 years as a central bank governor. I have spoken to my opposite number in Canada, Finance Minister Jim Flaherty, and the Prime Minister has spoken to the Canadian Prime Minister. As I am grateful for the constructive way they have handled this transition, as Members would expect from one of our closest friends and allies.
	Mark Carney will continue as Central Bank Governor of Canada until the end of May next year. My statement today is matched by a simultaneous announcement in Ottawa at a press conference currently being held by Mr Carney and the Canadian Finance Minister. Mr Carney will be answering questions about his decision to take this new job, but he has made it clear that he will not be commenting at length on British economic policy until he takes up his new post on 1 July 2013. There is one exception to that: Mr Carney has said to me that he would like to appear before the Treasury Select Committee at a mutually convenient time for a pre-commencement hearing, where he will of course expect rigorous questioning about British monetary and financial policy. This will be the first time ever that a new Governor has appeared before a Committee of this House before their term of office begins.
	Mr Carney’s pay and benefits are a matter for the non-executive members of the court of the Bank of England. The chair of the court, Sir David Lees, has today confirmed that Mr Carney will be paid a total pay and pension package that is broadly equivalent to the current Governor’s salary and membership of the now closed pension scheme available to the current Governor and deputy governors. The package is also lower than that of other senior regulators, such as the recent chief executive of the Financial Services Authority—even though the Bank now takes on many of that organisation’s responsibilities—and is less than that of the current chief executive of the Financial Conduct Authority. As Mr Carney is moving from Canada with his wife and four children, the non-executive members of the court of the Bank of England have said that they will consider in addition a relocation and accommodation package, which one would expect with such moves.
	Mark Carney is not a British citizen, but he is a subject of the Queen. His wife is British, his four children have dual British citizenship and he has lived, worked and studied in Britain for a decade. Although not required of the role, he will apply for British citizenship in the normal way, with no special favours. Let me also say something about—[ Interruption. ]

Mr Speaker: Order. These are very serious matters. I am pleased that the House is hearing about it first, but the House will hear only if it wishes to hear—and it should wish to hear. Let us hear what the Chancellor has to say.

George Osborne: Let me also say something about the deputy governor for monetary stability, Dr Charlie Bean, whose term in office expires at the same time as Mervyn
	King’s. Charlie Bean is a world-class macro-economist and a powerful voice on the Monetary Policy Committee. To ensure a smooth transition next year, he has agreed to my request that he serve for one more year as deputy governor. I am most grateful to Charlie Bean for his continuing service.
	The role that the Bank of England plays in our economy cannot be overestimated. It is tasked with keeping prices under control; it sets interest rates, which affect what home owners pay for their mortgages and businesses for their loans; and, following this Government’s reforms, it plays a lead role in keeping our banking system safe. My job brings with it many responsibilities, but few are greater than ensuring that the next Governor of the Bank of England is a person of real quality. Mark Carney is a quality Governor. He is the outstanding central banker of his generation, with unparalleled expertise in financial regulation. He will bring a fresh perspective. He has got what it takes to help British families and businesses through these incredibly challenging economic times. My responsibility was to get the best for Britain, and with Mark Carney we have got that. I commend his appointment to the House and to the country.

Edward Balls: I thank the Chancellor of the Exchequer for advance notice of today’s statement—although not of its content. I join him in thanking the outgoing Governor of the Bank of England, Sir Mervyn King, for his public service and I wish him a long and happy retirement. I commend the Chancellor on his choice of successor, Mr Mark Carney, to be the third Governor of the Bank of England since our decision to make it independent in 1997. We on this side of the House look forward to working with him closely in the coming months and years.
	I have known Mark Carney for a number of years and have worked with him closely. He has a long and distinguished record of public service, great financial expertise and a track record of handling tough and complex challenges. He follows in a tradition established in 1997 when the first appointments to the Monetary Policy Committee included Willem Buiter and DeAnne Julius, neither of whom were British citizens at the time. In my view Mark Carney is a good choice and a good judgment, and his experience will be invaluable.
	The Chancellor has made a short statement today, but this is a decision of great significance. With the leave of the House, I would like to ask a number of questions of the Chancellor concerning Mr Carney’s appointment and the role that the new Governor will step into.
	At a time of economic stress, the new Governor will need to get to grips with a new and massively enlarged central bank that has new, onerous and complex responsibilities in prudential and consumer regulation as well as its role in monetary policy and financial stability. That is a near impossible job for one person, but in our view it is made harder by the way in which the Chancellor has drawn up the Financial Services Bill, which is still being considered in the other place. We remain disappointed that he is continuing to resist the amendments tabled by the Chair of the Treasury Select Committee and ourselves that would enable the complex
	new arrangements for the Bank of England to be properly scrutinised. In our view, the new Governor would be strengthened and enhanced, not weakened, by greater transparency. Will the Chancellor think again about that matter?
	The Chancellor also needs to clear up the deep confusion at the heart of the new arrangements about who is responsible in a crisis, which he has not managed to clear up to our satisfaction under the current Governor. The Bill heaps far too much power on the new Governor, who, when dealing with the Chancellor, will be able to internalise and suppress the inevitable conflicts within the Bank of England between financial stability on the one hand and monetary stability, fiscal risk and moral hazard on the other. It makes no sense that the deputy governors, including the deputy governor who heads prudential stability, will have no undisputed right to put their views directly to the Chancellor, whether or not the Governor agrees. That is neither stable nor sensible. There is obfuscation in the Bill, and it is not good enough simply to have a memorandum of understanding with ad hoc committees. If the new Governor is to have a fair chance of success, the flaws in accountability and crisis management must be resolved. Will the Chancellor agree to sit down with the new Governor and sort this out?
	The new Governor of the Bank of England also looks set to inherit a difficult external economic environment, a global economy that still has serious imbalances, the eurozone in continuing crisis, and here in the UK, challenges to our banking system, to growth and to fiscal policy. So let me ask the Chancellor a further question about the relationship between the Treasury and the Bank of England that the new Governor will inherit.
	Given the blurring of the relationship between monetary and fiscal policy following the recent decision to transfer £35 billion from the Bank of England’s quantitative easing programme to the Treasury coffers—a move that is set to reduce short-term Government borrowing and increase the longer-term burden on the taxpayer—I very much hope that the new Governor and the Chancellor will agree with the Institute for Fiscal Studies, which has stated today that they should
	“exclude the impact of this change from all figures when assessing compliance with the fiscal targets”.
	Is that a matter that the Chancellor has discussed with the present Governor, the new Governor, the Office for Budget Responsibility or the Office for National Statistics? Can he reassure us that the IFS’s recommendations will be taken on board?
	Writing in the Financial Times earlier this year, I began an article by saying:
	“Wanted, a new governor of the Bank of England. Only superhumans need apply.”
	Superhuman or not, the new Governor of the Bank of England, Mr Mark Carney, is well qualified to take on the role at what will be a very difficult time. I am sure that I speak for the whole House when I say that we wish him and his family well.

George Osborne: Given the many fierce exchanges that the shadow Chancellor and I have across the Dispatch Box, it is only right for me to acknowledge my real gratitude to him today for welcoming this appointment.
	He knows Mark Carney, and he knows that he is an outstanding candidate for the job. I shall certainly cherish the words “I commend the Chancellor”, because I will probably never hear them from the right hon. Gentleman again. I sincerely thank him for that.
	One of the important things about the independence of the Bank of England, which the right hon. Gentleman helped to establish with the previous Prime Minister, is that it commands cross-party support—it did not at the time; it does now—and we must try to keep the appointment of the Governor out of the day-to-day partisan debate. The right hon. Gentleman has certainly played his role in doing that today. Let me answer specifically his questions about the new role of the Bank of England.
	First, on the shadow Chancellor’s point about the new responsibilities, the Bank has heavy new responsibilities because, in our judgment, the tripartite system did not work and was not properly co-ordinated. Indeed, the Select Committee of the last Parliament, which was chaired by Lord McFall—John McFall as he was then—said that it was not clear who was in charge. By insisting that the Bank of England is in charge of macro-prudential and micro-prudential regulation, we bring those things together.
	It is also important, secondly, that we recognise that the Government have an important role. When there is a material risk to public funds, there is a clear responsibility in the Bill for the Bank of England to inform the Treasury, without deluging it on a day-to-day basis with everything that is happening and not differentiating the things that are significant and really important. We have taken in the Bill the power of direction that did not previously exist. In the memoirs of my predecessor, the right hon. Member for Edinburgh South West (Mr Darling), he made it clear that at one point he was considering using the almost nuclear power of direction in the Bank of England Act 1946, which no one had ever used, but that he backed away from it because he did not have a more targeted instrument. We now have that targeted power of direction, which the elected Government can use.
	Thirdly, we have discussed the role of the deputy governors. Although it is incumbent on any good Governor and any good Chancellor of the Exchequer to try to make sure that views are heard, ultimately the Bank has to reconcile its internal differences rather than, as I have said, allowing the internal differences to be expressed externally without any attempt to resolve them internally. I make it my business in doing my job to see the deputy governors and to make sure that their views are heard.
	Finally, let me deal with the asset purchase facility coupons. This was done with the support and acceptance of the Governor of the Bank of England and the Monetary Policy Committee, which discussed it and agreed that that was a more transparent way of accounting for the quantitative easing coupons and how they will affect the public finances through the coming years. I can confirm for the right hon. Gentleman that when the Office for Budget Responsibility produces its report next week for the autumn statement, it will clearly show the impact of the APF coupons on the public finances, both before and after.

Andrew Tyrie: May I begin by thanking Mervyn King for his outstanding public service and hard work through the appalling financial crisis
	with which he has had to grapple? I support what appears to be the appointment of an extremely talented and experienced Governor, who has already been welcomed on both sides of the House. I welcome the fact that the Chancellor has come out in support of the Treasury Select Committee’s holding a hearing prior to the appointment of the new Governor and of the reporting of its conclusions to the whole House. Does the Chancellor agree that the legitimacy of the appointment would be further bolstered by giving the House an opportunity to debate that appointment in the light of our findings?

George Osborne: These days, of course, the House of Commons can choose what it wants to debate through the Backbench Business Committee, while the Opposition are always able to table motions, too. I do not think it would be sensible to try to divide the House on something like the appointment of the Governor of the Bank of England. One of the advantages of the Bank of England, as I was saying to the shadow Chancellor, is that there is an agreement that it should be kept out of party politics and the like; we have achieved that today. Mr Carney said clearly in my discussions with him that he did not want to talk about British economic policy at any great length at his press conference today or, indeed, while he continues as the Governor of the Bank of Canada, but that he did want to talk at length to my hon. Friend’s Committee. At a mutually convenient time, he will do that.

Geoffrey Robinson: Is the Chancellor aware that this may be the first occasion under his chancellorship at which we can wholeheartedly welcome his decision? I hope he will extend to Mark Carney, the prospective Governor, a warm welcome to these shores. We also hope that he will get his citizenship before his term of office expires.

George Osborne: I welcome the hon. Gentleman’s support. Perhaps we could bottle this cross-party consensus and use it on future occasions, but I doubt it.
	Mark Carney will apply for British citizenship, but he is absolutely clear that he should do so in the normal way—the same way in which anyone else would apply for it. One thing that I have learned from the last Government is that Ministers of the Crown should be very careful about becoming involved in citizenship decisions.

John Redwood: I welcome the appointment of someone who should bring new thinking to troubled banking and monetary policy in the United Kingdom. Will the Chancellor confirm that, when he has studied the subject, Mr Carney will be free to change our monetary and banking policy in ways that could promote a more sustained and favourable economic recovery?

George Osborne: I thank my right hon. Friend for his support for the appointment. We have now united all points on the spectrum.
	The Governor of the Bank will chair the Financial Policy Committee, the body that will be responsible for macro-prudential regulation. In other words, he will set overall guidance on issues such as capital and liquidity, about which I know my right hon. Friend has spoken
	powerfully. Any decision on the framework of the inflation-targeting regime and the like will be made by the elected Government and not by the Governor of the Bank.

Helen Goodman: I am sure that this is a question that the Chancellor has considered. Will he explain how Mr Carney will handle any conflicts of interest that arise during the period between now and his taking up his post in London?

George Osborne: There should not be any conflicts of interest, because he is very clearly the Governor of the central Bank of Canada, will remain so until the end of May, and will fight Canada’s corner as we would expect him to do. However, he is also the chair of the Financial Stability Board, of which we are a member. He is already heavily involved in international financial regulation and in decisions that have a real impact on our financial services. Moreover, Canada is a G7 country, and is probably one of our closest allies: it is difficult to think of a closer ally than Canada. We already work incredibly closely with the Canadians. Incidentally, the fact that we co-ordinated the press conference in Ottawa and the statement in the House of Commons today and the news did not leak in advance shows that the two Governments work together and trust each other.

Stephen Williams: On behalf of the Liberal Democrats in the coalition, I welcome Mr Carney to his post. Although he will not take up his position until next summer, no doubt his views will be keenly studied in expectation of his doing so. Does the Chancellor agree that one thing that all our constituents will want to hear from him is a clear indication that he will expect the very highest professional standards in the banking industry, so that bankers can be seen to be working in favour of taxpayers and consumers and not just with self-regard?

George Osborne: Mr Carney has been pretty tough in Canada, and Canada has a much better record than this country of avoiding bail-outs and keeping Canadian banks safe. As chair of the Financial Stability Board, he has been very keen to secure international agreement on new, tougher rules on pay, risk-taking and the like in order to ensure that individual financial centres do not try to out-compete each other for less and less regulation. I should also make clear that he supports the John Vickers reforms that we will be introduced in the Financial Services (Banking Reform) Bill, including the ring-fencing of retail banking, which is the really major reform of banking that the coalition Government are bringing about.

Dennis Skinner: Having listened to all the plaudits, all I can say is that this man Mr Carney and Mr Bean had better be good.

George Osborne: I can assure the hon. Gentleman that Dr Carney and Dr Bean are excellent.

Andrea Leadsom: I am so excited about this appointment that I could jump up and down—but I won’t.
	Does my right hon. Friend agree that at some point during the next year he should have a chat with Dr Carney about the ground-breaking bank revolution that would ensue from bank account portability, and about the fact that that could be the very first thing that he did as the new Governor of the Bank of England?

George Osborne: I hope that my hon. Friend will contain her excitement when she has a chance to question Dr Carney, when he appears before her Select Committee. As she knows, from next year we will have full account-switching, which means that people will be able to switch their bank accounts, including direct debits and so on, within seven days. That will make switching much easier. My hon. Friend has advanced strong arguments for going further and introducing account portability, and we are studying that idea closely. There are pros and cons, which the Vickers commission considered, but she has put her case very powerfully.

Mr Speaker: The father of the hon. Member for South Northamptonshire (Andrea Leadsom) is a distinguished constituent of mine. I do not know what he would make of it if I allowed her to jump up and down in the Chamber. It scarcely warrants contemplation.

George Mudie: The present Governor has commented on the dire state of the economy. The new Governor has international commitments, will face European commitments, and new regulations going through the other House give him many other responsibilities. Will the Chancellor please genuinely reconsider the number of posts that the new Governor will be forced to hold under the new arrangements? The grimness of the economic situation demands his full attention, and the posts are far too many for one person.

George Osborne: The one thing that we have learned is that regulation of banks and managing of demand in our economy cannot be separated; they are part of a continuum and that is one of the things that went wrong. Of course the Bank of England takes on heavy responsibilities, and the new Governor will have to manage the Bank in a very effective way to manage those new responsibilities. Mervyn King has already said that there needs to be a chief operating officer in the Bank, and there will be three deputy governors: for macro-prudential, micro-prudential and monetary policy. They too need to shoulder the burden, as indeed they currently do.
	One thing that attracted the panel that interviewed Mr Carney, and me when I interviewed him, was his management experience in Canada. He is well regarded for having run a good bank in Canada as a manager, as well as for the international credibility he has earned for his economic and financial policies.

Mary Macleod: I welcome my right hon. Friend’s announcement and wish Mr Carney the very best. Will my right hon. Friend reassure me that women were encouraged to apply for this role? If he is looking for someone superhuman, often it is women who fit that category.

George Osborne: There were some excellent female candidates but—I will be absolutely candid with my hon. Friend—it was rather disappointing that there were not more
	female candidates of the highest quality. Both I and my predecessor faced that issue with appointments to the Monetary Policy Committee, and I would like to work constructively with people who have ideas on how we can encourage women in the economics profession to aim for a career in public service, the MPC, or central banking. We must do more to encourage that because, as I said, both I and my predecessor found that we did not have as wide a range of female candidates for the MPC as we would have liked.

Pat McFadden: There are good reasons for the Chancellor to appoint the Governor of the Bank of Canada. As he said, Canada weathered the crisis well and was the first G7 country to restore employment and GDP to pre-crisis levels—a stark contrast with our own position. Will the Chancellor discuss the Canadian experience with the new Governor in order to get lending moving? He will know that initiatives such as Merlin have not worked, and unless we get lending flowing to the real economy we will not get the recovery that we all want.

George Osborne: Canada had the advantage of going into the crisis with properly managed public finances, and it avoided the large bank bail-outs that we had in this country—RBS was the biggest bank bail-out in the world—because its banks were better regulated. Hopefully, Mr Carney will bring some of that experience.
	The right hon. Gentleman makes a serious point about lending in the economy. The Bank of England has created the funding for lending scheme, and we see the impact of that in new products that banks such as Santander and Lloyds have launched. He is right to say that that is one of the things we have to be on in terms of economic management. The de-leveraging in our economy is still one of the real headwinds to recovery.

Peter Tapsell: My right hon. Friend, if I understood him aright, has just said that Dr Carney supports the ring-fencing arrangements recommended in the Vickers report. May I ask him to bear in mind that Sir Mervyn King made it clear last week that he does not support them and nor do Mr Paul Volcker and the Archbishop of Canterbury-select? And nor do I.

George Osborne: My right hon. Friend has read out an extremely distinguished group of individuals. What he did not say was that, as I understand his position, he would like the banks split entirely in a Glass-Steagall-like separation. Over the past couple of years we have constructed a consensus on ring-fencing. We appointed John Vickers and his very experienced commission to do the job, and they looked explicitly at ring-fencing and came forward with their proposal. That proposal has now been discussed in this Chamber and commands consensus across the system. If we were suddenly to back away from it now and say that we wanted to start all over again with some other approach, that would delay everything. That would not be the right approach, and it would destroy the consensus that exists on ring-fencing.

Barry Sheerman: I do not want to strike a dissonant note, but is it not a little surprising that in practically the leading banking
	nation on earth we could not find a British candidate for the job? We have chosen a Canadian, who I am sure was a good candidate. Normally, the overlap between the retiring Governor and the new one would be longer. Is that not a worry, even with Dr Bean staying on an extra year?

George Osborne: As I said, there were excellent British candidates, any of whom would have made a good Governor. In my judgment, though, Mr Carney was a better candidate. He was the only one who combined central banking experience, economics, experience of financial regulation and experience in the private sector. It says something about Britain that we have the self-confidence to go and get the very best in the world to serve as our Bank Governor.

David Ruffley: I welcome this bold announcement. The Chancellor is rightly concerned with the stability of the transition and has extended Dr Bean’s term, but does he wish the immensely able Paul Tucker to continue as deputy governor?

George Osborne: The very short answer is yes. Paul Tucker has been an excellent deputy governor, and I hope he continues to do his excellent job at the Bank of England.

Kelvin Hopkins: Mervyn King’s predecessor Eddie George said that the single currency should be kicked into the long grass and left there. Will the new Governor continue to support the independence of Britain’s currency?

George Osborne: I will not speak for the new Governor, but I am sure he could be asked that question. I am pretty clear that he would support the pound, because he has seen at first hand through the Financial Stability Board some of the problems that have arisen in the euro. I reassure the hon. Gentleman that any decision to ditch the pound would be one for the Government of the day and the House of Commons, and while this Government are in office we will keep the pound.

Claire Perry: In Mr Carney, we have a man with unprecedented experience of financial stability. We also have an Office for Budget Responsibility that publishes transparent, independent numbers, and we now have a structural and regulatory plan for the banking system and a Government committed to restoring faith in the public finances. Does the Chancellor agree that the risk of boom and bust is therefore diminished?

George Osborne: I will not make the mistake of the last Prime Minister and claim to have abolished boom and bust. I do not know which young adviser of his put that idea into his mind.[Interruption.] With transparent and independently audited public finances, an excellent central bank Governor and new responsibilities for the Bank of England, we have a better framework than the one that we inherited.

Ian Austin: Is it not the case that Mr Carney ruled himself out some months ago? So what does the Chancellor think changed his mind—could it have had anything to do with Labour’s new lead in the opinion polls and the new Governor’s long-standing friendship with the shadow Chancellor?

George Osborne: The short answer to that is no.

John Baron: The risk with quantitative easing is higher inflation and a weaker currency. Will the Government use this appointment to re-examine whether QE actually encourages better or higher economic growth?

George Osborne: The Monetary Policy Committee has not requested additional headroom to conduct QE. As I have said, I think QE has been the right instrument to try to keep yields down and support demand, but any questions about Mr Carney’s view of QE in the British context will be ones that the Treasury Committee can direct at him.

Andrew Love: I welcome this appointment and, in particular, Mr Carney’s willingness to come before the Treasury Committee as his first duty. What discussions has the Chancellor had with the Office for National Statistics and the Office for Budget Responsibility about the £35 billion asset purchase facility coupon scheme? Does he accept that it will be an exceptional item in the Government accounts?

George Osborne: Crucially, I discussed this matter with the Governor of the Bank and he discussed it with the Monetary Policy Committee, and they thought it was a sensible move. As I have said to the shadow Chancellor, when the OBR produces its fiscal forecasts next week it will make very clear—I requested this—the distinction between the public finances with and without the APF move.

Philip Hollobone: May I applaud the Chancellor for making his statement to the House of Commons first, and urge him to use that as a precedent for any future statements he may wish to make? What particular experience of recent Canadian economic performance will be of most use to Mr Carney in his new role as Governor of the Bank of England?

George Osborne: First, I am glad to have been able to make this announcement to the House of Commons, and I commend all those involved in the process for keeping the information secret. I want to pay tribute to the Canadian Government for also keeping this information secret until we could simultaneously make this announcement to the House of Commons and to the Canadian people in the Ottawa press conference. Sorry, I have forgotten the second bit of the question—

Philip Hollobone: The recent Canadian experience—

George Osborne: The Canadian economy did better than any other major western economy in weathering the financial crisis. Its public finances were in better shape, its banks were better regulated and the Bank of Canada was able to take Canada through this period in a way that in Britain and in many other western economies we wish we could have emulated.

Bill Esterson: When the Chancellor speaks to the new Governor, will he discuss the Engineering Employers Federation’s comments that further austerity will not help the British economy because it is too weak and that the policy should be for growth and not cuts?

George Osborne: Fiscal policy is the responsibility of the elected Government and the House of Commons, but I would say that all the business organisations have supported our plan to deal with the deficit because they know how important it is to securing low interest rates and stability. Frankly, I have yet to hear what the current alternative is from the Labour party. I will save this for next week, but the Opposition used to have a five-point plan and I have no idea whether they are still committed to it. They claim that they want to be responsible with the deficit, but they have absolutely no plans to cut the deficit. I am just getting warmed up for next week, but we will wait a week to have those arguments.

Charlie Elphicke: Will the Chancellor and the new Governor examine the possibility of bringing in depositor preference with a view to reducing the risk of bail-outs and nationalisations of UK banks in future?

George Osborne: Depositor preference does not exist in the UK, but it does exist in countries such as the United States and Switzerland. It is something that we are planning to introduce and it was one of the recommendations of the Vickers commission.

Alison McGovern: I thank the Chancellor for his announcement and associate myself with the warm words of welcome from both him and the shadow Chancellor. He has already mentioned the ring fence between investment and retail banking. Will he go a little further and tell the House what specific conversations he has had with Dr Carney about the ring fence?

George Osborne: I think that that would breach the confidentiality of the interview process, but Mr Carney will come before the Select Committee and will no doubt be asked about his views on the Vickers reforms. As I have said, he supports them and it is important—this comes back to a point made by my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell)—that we now have consensus across our regulatory system. John Vickers has provided that consensus. We will introduce a Bill next January. Let us get on and make that important change. We are leading the world and, interestingly enough, a lot of the rest of the world is thinking of following us in that direction.

Alun Cairns: Mark Carney’s actions have played a major part in helping Canada to avoid the worst of the financial crisis. Will the Chancellor reassure the House that he will be given the necessary freedom to take the required action here in the UK —something that the current Governor did not always enjoy under the last Administration?

George Osborne: I will leave the accounts of what happened under the previous Government to the various memoirs and the like. Of course, Mark Carney has independence in monetary policy and will have to work with the Government on financial stability, which is a crucial issue in which the elected Government are also involved when public money is put at risk. We will work closely together to secure the British recovery and ensure that we have something more of the Canadian experience here in Britain.

European Council

David Cameron: With permission, Mr Speaker, I would like to make a statement on the European Union Council last week.
	Last week’s Council was unable to reach agreement on a seven-year budget framework. This Government rejected a proposal that would have risked UK taxpayers paying for unaffordable increases in the EU’s annual budgets. We did so together with like-minded allies from a number of countries. As net contributors to the EU, those countries, like Britain, write the cheques and together we had a very clear message: we are not going to be tough on budgets at home and then sign up to big increases in European spending in Brussels.
	Let me explain to the House the proposal we rejected, why a deal is still doable, why it is still in our interests to work to achieve that deal and why throughout these negotiations I will continue to protect the UK’s rebate. Our objective for EU spending in the seven years to 2020 is clear: we want to see spending reduced and will insist on at least a real-terms freeze. As the House knows, the actual EU budget is negotiated annually. What we were negotiating in Brussels last week, and will return to again next year, is the overall framework for the next seven years, which includes the overall ceilings on what can be spent. During the last negotiation, which covered the period 2007 to 2013, the last Government increased the payments ceiling by 8%. The commitments ceiling was effectively set at €994 billion, well above the level of actual spending. It was a bit like having a credit card limit far above what one can afford and it was an open invitation to the EU’s big spenders to push for higher and higher spending every year. We are still paying the price for that decision.
	This year, 2013, the Commission and the European Parliament are attempting to grow the annual budget by another 6.8%. I am determined to get the ceilings down in line with what we can afford. Prior to the Council, the Commission produced a ludicrous proposal to increase the commitments ceiling still further to more than €1 trillion. We said no. The Cypriot presidency produced a slightly lower total, and going into this Council, the President of the Council, Herman Van Rompuy, produced a new proposal, this time with a ceiling of €973 billion.
	As you can see, Mr Speaker, we were making progress in getting the ceilings down, but as I and other leaders made clear, it was not enough. We set out a number of very reasonable ways in which the seven-year ceiling could be reduced even further, by tens of billions more. What was disappointing at the Council was that having heard those proposals, the presidency offered a new proposal that failed to reduce significantly the previous total and simply redistributed money to buy off different countries. In a seven-year budget of almost €1 trillion, the idea that there are no real savings to be found is simply not credible. For example, when it came to the bureaucratic costs of the European Commission, not a single euro in administrative savings was offered—not one euro. We need to cut unaffordable spending. The deal on the table was not good enough and that is why we and others rejected it.
	But we do believe that a deal is still doable. There is absolutely no reason why we should not be able to reduce the seven-year ceilings down to the level needed.
	There is plenty of scope for significant savings in the common agricultural policy and the structural and cohesion funds, but there are also savings to be had in the rest of the budget. For example, freezing the ceilings for security, justice and external spending would allow €7.5 billion of additional savings. There are some programmes, such as Connecting Europe, which have enormous proposed increases in their budgets that could be radically scaled back.
	As I have said before, there is simply no excuse for not taking a much tougher approach towards the EU’s administrative costs. The EU institutions have simply got to adjust to the real world. A 10% cut in the overall pay bill would save almost €3 billion. Relaxing the rules on automatic promotion, which they have at the EU Commission, would save €1.5 billion. Reducing the extraordinary generosity of the special tax rules for Brussels staff—the levy—could save around another €1 billion, and changes to pension rights could save another €1.5 billion. All these are perfectly reasonable proposals. That is why a deal is still doable. We will push hard for these reductions when negotiations resume next year.
	Let me briefly be clear about why we want a deal. If no deal is reached, the existing ceilings are simply rolled over and annual budgets are negotiated on a year-by year-basis, taking account of those ceilings. Crucially, we would not get the reduction we need in the seven-year budget ceilings negotiated by the last Government. The credit card limit would stay beyond what is affordable, tens of billions of euros higher even than the deal we rejected at this Council. It is therefore in our interests to get a deal, but it must not come at any cost. We must not lock in unaffordable ceilings for the next seven years, so if necessary, we may have to galvanise a coalition of like-minded countries to deliver budgetary restraint through annual budget negotiations each year.
	Finally, let me say a word about the UK’s rebate. As well as ensuring fairness in terms of the overall size of the EU budget, it is also essential to ensure fairness in the net contribution that each country makes to that budget. At this Council, we faced, as ever, determined pressure from many sides for our rebate to be slashed. The changes on the table, in the proposal in front of us, would have cost the UK more than €1 billion every year. I was clear that all of that was completely unacceptable. Britain more than pays its way in Europe. On a per capita basis, Britain is the eleventh richest nation, yet as a share of our national income we are the third largest contributor, and that is with the rebate—or what remains of it after so much was given away by the last Government. Without the rebate, we would have the largest contribution in the European Union, double that of France and almost one and a half times as large as Italy’s or Germany’s. That would be completely unfair. It is why Margaret Thatcher was right to fight so hard to win the British rebate, why the last Labour Government did this country such a disservice by agreeing to give part of it away and why no Government I lead will ever put the British rebate back up for negotiation.
	We put down a marker at this Council. We stood up for the taxpayer. Together with like-minded allies, we rejected unacceptable increases in European spending, and we protected the UK’s rebate. We are fighting hard for the best deal for Britain, and that is what we will continue to do. I commend this statement to the House.

Edward Miliband: I thank the Prime Minister for his statement. Clearly, this is not the first EU budget negotiation to go into a second round, and no doubt it will not be the last. The real question remains what deal will eventually be delivered. I want to ask about the budget level, what the budget will be spent on and the Government’s negotiating position.
	On the budget level, I was surprised by one omission in the Prime Minister’s statement. Somehow, he forgot to thank this House for sending him into the talks with the strongest possible mandate in the negotiations: a vote supported by Members on both the Government and Opposition sides. At the time of the vote, the Deputy Prime Minister, who I notice is absent, said that what was voted on was a completely unrealistic position and that there was no hope of getting a deal—a tell-tale sign that the opposite might be true.
	Given that the Prime Minister now says that there is widespread support in Europe for a tough settlement, can he say what prospects there are for meeting the call of this House of Commons for a real-terms cut in the EU budget? Does he now regret not seeking to build alliances for a real-terms cut in spending at the outset of negotiations? Looking ahead to the deal that still needs to be done, can the Prime Minister confirm in precise terms what he means by a real-terms freeze? There are obviously many different definitions around, but we have the Government’s definition set out by the then Economic Secretary in her memo of 16 July 2011. That was for a European budget of €885 billion in actual payments over the seven-year commitment period. The Prime Minister has been somewhat coy on this point, so can he confirm that that remains the position as set out by the former Economic Secretary to the Treasury?
	Next, may I ask the Prime Minister about the composition of the budget, which is as important as the budget level itself? We need to reshape the budget so that it supports jobs and growth with investment in infrastructure, energy and research and development. He said as he arrived in Brussels that
	“it is not a time for tinkering”,
	and at his press conference on Friday he said:
	“Already being contemplated is a big cut in agricultural spending”—
	something that is supported in all parts of this House. However, what is the big cut in agricultural spending that he is talking about? Will he confirm that the proposal on the table sees agriculture spending remaining on average at 38.3% of the European budget—almost exactly the same level as it is now? Does he really believe that that is the major reform that is required in the spending of the European budget? Does he agree that what is even worse is that to keep the subsidies high, money is being taken from much-needed investment in energy and other infrastructure? I think that part of that comes from the Connecting Europe budget. Did he object to this part of the proposal?
	As we anticipate the further negotiations in the months ahead, the wider stance of the Government towards the EU will also have an impact. The Prime Minister has said repeatedly that he is in favour of Britain remaining a member of the European Union. Why, therefore, is he allowing his colleagues to take the opposite position? Last month, the Education Secretary briefed that he is open to leaving the European Union. On Saturday, the
	chairman of the Conservative party said that we should threaten to leave if we did not get a good deal. Now we have the new vice-chair of the Conservative party—we think it is great to see him in his place—touring the studios, talking not about a budget deal but about a deal with the UK Independence party. Does the Prime Minister believe that such divisions help or hinder our national interest in delivering a good budget deal? Why, at a time of continuing negotiations over the budget, is he allowing members of his Cabinet openly to undermine his position on membership of the EU? It is no wonder that everyone, from British business to our European allies, believes that we are drifting towards the exit door.
	As we look ahead to the next round of budget negotiations, is not the reality of the situation that the Prime Minister has a divided party on Europe? Instead of confronting the issue—[ Interruption. ] They say that they are not divided, but half of them want to leave the EU, and that is not the position of the Prime Minister—so we gather. He has a divided party on Europe, and instead of confronting the issue he is just letting the problem get worse. He spent his statement talking about the deal that he did not do; what matters is what he delivers for Britain. For as long as he allows his party to drag him towards the exit door, he will find it far harder to build lasting alliances and far harder to deliver for the national interest.

David Cameron: First, let me answer on the right hon. Gentleman’s specific points about figures. He asked about the scale of the cut that was envisaged for the common agricultural policy. In terms of tier 1 of the CAP, the proposal, to be fair to pillar one—to be fair to the Council and to the Commission—was to cut it from €336 billion to about €270 billion. So a cut was proposed for the CAP, but we made the point that even with that, we could go ahead and reach a good budget settlement. We said that without doing even more on the CAP we could reach a deal by looking at administrative savings and Commission savings, and also by looking at some of the programmes that are, quite rightly, being expanded, but expanded far too much. For example, Europe spent €8 billion on the Connecting Europe proposal in the last financial period, and it was proposed that that was increased to some €36 billion, so we could make significant cuts in that proposal and still land a sensible deal.
	The right hon. Gentleman referred to the memorandum that we put in front of this House, which referred to the 2011 situation and the 2011 budget. What I have said is that, yes, we want a cut, but we should settle, at worst, for a real-terms freeze—and of course that freeze would be across the period 2013 to 2020.
	The right hon. Gentleman asked why we had not built any alliances. I am happy to tell him that the Dutch, the Swedes, the Danes, the Finns and the Germans all very much backed our position. I might ask him about his alliance, as he is in alliance with the socialists in the European Parliament, whose position was to favour a 5% increase in the ceilings, not a cut. They wanted to end all rebates and to introduce a financial transactions tax of up to €200 billion. If he does not believe that, he should listen to the leader of the European socialists and democrats, Mr Hannes Swoboda, who said:
	“Regarding the additional cuts, it is unacceptable that the majority of member countries are letting themselves be blackmailed by David Cameron”.
	That is the view of the socialists.
	The right hon. Gentleman has made his approach in this Parliament, but if he had been at the Council he would have heard a lecture by the socialist head of the European Parliament, who told the whole Council that anything that was a cut to what was being proposed would be completely opposed by everyone in the socialist group in the European Parliament, including his MPs. If the right hon. Gentleman wants to get a good deal for Britain, he might start by talking some sense to his socialist friends.

William Cash: Given the fact that, over the past 20 months, we have had about as many economic summits, and they have gone nowhere, given that Mrs Merkel is now saying that she wants the European Commission to be the European government and given the statements that have been made by Mr Barroso about a federal union, does my right hon. Friend not think that the time has now come to establish a lead on the question of a fundamental change in our relationship with the European Union and to do what the British people want, and get on with it as soon as possible, before it is too late?

David Cameron: I agree with my hon. Friend about the number of European Councils. That is undeniable; there has been a huge quantity.
	I agree with my hon. Friend that there is an opportunity for a change in Britain’s relationship with the European Union. That is why I have talked about a new settlement and fresh consent for that settlement. Where I think I disagree with him is that we need to show some patience while the eurozone sorts itself out, and as the eurozone integrates I think there will be opportunities for that. As for his comments about the Germans, I hope that he is a regular reader of Der Spiegel online, because after the Council it said:
	“Danke Grossbritannien…you’ve given hope to many people suffering under the terror of EU bureaucracy”.

Keith Vaz: A hundred thousand Syrian refugees have entered Turkey in the past year and 16,000 have applied for asylum in the EU, having crossed the border between Greece and Turkey. No matter what the Prime Minister’s negotiation position is in respect of the overall budget, will he give an assurance that he will protect the budget for Frontex, which protects the external limits of the EU, which must be in Britain’s best interests?

David Cameron: The right hon. Gentleman makes an important point. Frontex does good work and we have supported its budget, but like any Government, what we are asking the European Commission and European Council to do is attempt to do more for less. They have to look across each budget area, work out where the pressures are and, obviously, direct resources in that way, but they also have to try to find savings elsewhere, as every Department of Government has had to do.

Menzies Campbell: As someone who supported my right hon. Friend in the Lobby a fortnight ago out of conviction, may I offer my congratulations to him on the alliances that he appears
	to have formed in Europe? Is that not an eloquent illustration of the principle that engagement is always more effective than detachment?

David Cameron: I am very grateful for my right hon. and learned Friend’s support. It has been important to have these alliances on behalf of countries that want a sensible settlement. We now have to work very hard to keep that alliance together so that we can land a deal that is in the interests of British taxpayers and, I would argue, taxpayers across Europe.

Mike Gapes: The Prime Minister said that he wanted to galvanise a coalition of like-minded countries and referred in another answer to the Netherlands, Sweden, Denmark, Finland and Germany. Is it not a fact that, while they may have tactically agreed in this summit, there are very large differences between all those countries and his party’s position?

David Cameron: Actually, I think that the hon. Gentleman is wrong about that. The countries on the list that I read out are our classic allies that we put together in almost every year’s budget negotiations to try to ensure a reasonable outcome. The problem is that annual budgets are decided on a qualified majority basis, so we can be outvoted. The multi-annual financial framework is subject to unanimity, so we can put our case vigorously. The point that I made in my statement is that if we do not achieve a new framework, we will need even more than today to keep the tough budget discipline together for the annual budget negotiations that follow.

Richard Ottaway: Far from being isolated, I congratulate my right hon. Friend on consolidating the alliance with Germany, Sweden, Holland and Denmark. Are there any signs that that new grouping will work with us on further reforms and, in particular, on reform of the single market?

David Cameron: The countries on the list that I read out tend to be fairly strong allies on much of the single market agenda. We are also joined in our support of the single market by the Italians and, to an extent, with the Spanish now that Mariano Rajoy is Prime Minister. We need to try to win the argument with large net contributors, such as Italy, that the best way to protect the interests of their taxpayers is to restrain the overall budget, rather than simply to measure their receipts under the CAP or the cohesion policy.

Dennis Skinner: Isn’t this scenario getting a bit boring? When the Prime Minister went to Europe fighting alone, he came back with nothing. He has now formed alliances with all the dodgy people he referred to and he has still brought nothing back. Even John Major came back with two opt-outs—even John Major.

David Cameron: I will tell the hon. Gentleman what I have managed. The last Government put us into the bail-out fund; I got us out of the bail-out fund. The last Government gave away part of our rebate; I am keeping our rebate. We are making progress, but obviously we will have to do a little more to satisfy him.

Michael Ellis: Does my right hon. Friend agree that the bloated Brussels bureaucrats are talking balderdash when they refuse to offer a single cut, despite the fact that more than 200 Commission staff earn more than he does and that they apparently have up to 93 holiday days a year?

David Cameron: I think that it is perfectly possible to save money in the Commission’s budget. Its staff have things such as automatic promotions, very generous pension arrangements and expatriation allowances for living in Brussels, even if they have been there for 30 years. It is time to have a clear-out of such things and the Commission needs to be convinced of that. Part of the point of building the alliance is to say to the Commission, “You really have to look at your own budget.” That is not the whole answer, because administration makes up only 6% of the total, but it can make a contribution.

Elfyn Llwyd: I am concerned that the Prime Minister says that there are savings to be made in cohesion and structural funds. He is aware that many areas of the UK, such as west Wales and the valleys, enjoy receiving such payments. Is he saying that he can foresee a cut in that support?

David Cameron: There is a need for cuts in the overall cohesion and structural funds budget of the European Union, given the fiscal constraints that the net contributors are operating under. We should be frank and honest as a country in saying that, although there are regions of the UK that still benefit and should go on benefiting from structural funds, such funds should, on the whole, be for the poorest regions of the poorest countries. Britain’s negotiating position is different from that of many countries in that we do not go to Brussels and simply defend every penny that we receive; we try to seek an outcome that is right for the whole European Union. We cannot for ever argue for restraining the budget if we want to keep hold of structural funds for countries that are better off than most.

Simon Hughes: The Prime Minister will know that he is supported by those on the Liberal Democrat Benches in being robust in Brussels and in ensuring that the European Union understands that we live in a time of austerity in which it has to restrain its spending, as we are restraining ours. Although he is working satisfactorily with our allies on this matter, will he confirm that there is no truth in the rumour that we are trying to get an opt-out on the common market for financial services? If we are to prevent tax evaders, criminals and terrorists from using our country or any other to hide their assets, we need a common market for financial services. Will he confirm that we will lead in arguing for that objective?

David Cameron: We support the single market in all its forms. We are trying to ensure that when the banking union proposals, which include a proposal for a single supervisor under the European Central Bank, come through, they do not damage the interests of those countries that are in the single market but not the single currency. As I have already said, part of our G8 presidency next year will be targeted on cracking down on tax evasion, tax avoidance and the rest of it.

Kate Hoey: What will the Prime Minister do if he does not get a real-terms freeze? Is he prepared to use his veto? Will he also make it clear that he is quite happy for decent, respectable people in my constituency to be members of UKIP?

David Cameron: I am very happy for anyone to join any political party—it is a free country. On the budget, we have a clear position. We are trying to get the ceilings down and cuts are already proposed. We want the ceilings down to such an extent that we achieve the real-terms freeze at worst, or a cut at best. I am convinced that we should achieve that if we keep the force of our arguments and keep the coalition of like-minded countries together.

Nicholas Soames: My right hon. Friend the Prime Minister will have been fortified by the solid alliances he built in the interests of dealing with the budget. Does he agree that those alliances are particularly serviceable when it comes to driving ahead with the growth agenda in Europe? Will he not allow that to slip below the radar?

David Cameron: My right hon. Friend is absolutely right. We will keep pushing forward the growth agenda, based on completing the single market in digital, services and energy. It is also important to recognise that the budget, even with the reductions I propose, would still be a growth budget, because it would transfer funds from agriculture into growth areas such as supporting research and investment, from which Britain is quite well placed to benefit.

John Cryer: Does the Prime Minister believe that the rising tide of unemployment and poverty across western Europe is a price worth paying in order to save the euro?

David Cameron: The rising tide of unemployment across Europe is clearly a tragedy, but we need to look across Europe and ask why some countries are doing so much better than others at tackling unemployment, and particularly youth unemployment. Youth unemployment is far lower in, for instance, Holland and Germany than in Spain, Italy and—yes—the UK. There is more to learn about welfare reform, apprenticeships and education standards. We can apply those lessons here to ensure that we keep unemployment falling.

Jacob Rees-Mogg: I hope the Prime Minister will be pleased to know that he is once again the toast of Somerset for returning from the European summit so successfully, and we look forward to his further success. For as Sir Francis Drake said, it is not the beginning but the continuing of the same until it is thoroughly finished that yieldeth the true glory. We look forward to the true glory of the Prime Minister when he comes back next time with a cut.

David Cameron: I am grateful to my hon. Friend for his remarks and his support, but I commiserate with him and many in Somerset who will not be toasting anyone today because they are suffering from the appalling floods over the weekend.

Chi Onwurah: As my right hon. Friend the Leader of the Opposition has said, we need to reshape the EU budget to support jobs and growth rather than cut investment in R and D, as this Government have done by 7% in one year. Will the Prime Minister say specifically what he is doing to support R and D investment within an overall budget cut?

David Cameron: I can; the hon. Lady makes a very good point. If she looks at budget heading 1a, which includes all research, university and other spending—out of which Britain, with high-quality universities, does quite well—she will see that, in the last period, 2007 to 2013, the EU spent about €83.5 billion. The proposal on the table on 22 November was to spend €108 billion. That is quite a significant 20% increase. I would argue that we could take that increase back a little in order to help to get an overall deal without harming the fact that this is a growth budget that wants to support research and jobs.

Bernard Jenkin: I join my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) in commending engagement rather than detachment, but does the Prime Minister agree that this is not about submitting to European demands, but about staking out our own national interest and building alliances around that? Is not that a lesson for the future?

David Cameron: I do not want to come between this great friendship that is opening up across our Benches. It is important to form alliances to try to get deals that are in our national interest, but as in all these things we have to have a bottom line, and sometimes that means that we will have to go it alone.

Stephen Doughty: Does the Prime Minister agree with his party chairman that we should leave open the option of exiting the EU?

David Cameron: As the hon. Gentleman knows, my view is that the problem with an in/out referendum is that both the options are not really what I would want or what the British people would want. I do not think that keeping our membership as it is under the status quo is acceptable: nor do I think that walking away from Europe would be a sensible idea. That is why we need a new settlement—and new consent for that settlement —and that is what we will set out.

Edward Leigh: At an appropriate moment of the Prime Minister’s choosing—say, around the next general election—will he grant the British people a referendum on our relationship with the EU?

David Cameron: I will be saying a bit more about that later this year. As I have said, I think that opportunities are opening up. As Europe changes—and the changes are coming because of the single currency and what it is doing to the European Union—options are opening up to form a different, better relationship that the British
	people would back. We will then have to work out exactly how to get the consent for that relationship that the British people deserve.

Paul Blomfield: Following the Prime Minister’s earlier answer, he will know that the draft research and innovation budget in Horizon 2020 includes a number of elements that were not part of FP7 and therefore the growth is misleading. Will he reassure the House that he will fight unambiguously to protect the research and innovation budget?

David Cameron: The hon. Gentleman makes a good point. The figures I read out are the correct ones—€83.5 billion in the last period and a proposal for more than €108 billion in the last negotiating box. I can reassure him that the like-minded group of countries that came together to argue for further tens of billions of cuts in this proposal were looking for only a very small reduction in that heading in the European budget. You can get down to the sort of figures we need without fundamentally changing that budget heading.

Michael Fabricant: My right hon. Friend will know that I am rather keen on pacts. Does he recall that Opposition Front Benchers said that he would be in utter isolation when he went to negotiate in Europe? Does he agree with me that working with other countries, such as the five that he has mentioned, actually delivers results for the British taxpayer?

David Cameron: I absolutely agree with my hon. Friend. He is completely right to talk about the importance of working with other countries. I commend him on all the very good joint working that he managed to do in encouraging colleagues to go and campaign in the Corby by-election.

Kelvin Hopkins: The Prime Minister and my right hon. Friend the Leader of the Opposition made much talk of agriculture today. Is it not time to call for the abolition of the common agricultural policy and the restoration of agricultural subsidies to national Governments, not the European Union?

David Cameron: The hon. Gentleman makes a very interesting submission to the balance of competences review that this Government are carrying out, and I urge him to engage fully with that process.

James Clappison: I commend my right hon. Friend on doing all that can humanly be done to defend our national interest on this, but is not the most important alliance that he has formed the one with public opinion in Europe, which no doubt finds it astonishing that this profoundly undemocratic organisation is seeking a large increase at a time when the whole of the rest of Europe faces fiscal pressure and, in some cases, grave economic crisis—in no small measure due to the euro itself?

David Cameron: My hon. Friend makes a good point. While it is disappointing not to get a budget deal at the first time of asking, this will give European leaders further time to reflect on public opinion in their own countries. I think that many people across Europe in all those countries that are significant contributors to
	the EU—and maybe even some that are not net contributors —will agree that it is right that when difficult reductions are being made in budgets at home, the same should happen in Brussels.

Sheila Gilmore: Does the Prime Minister agree that his negotiating hand in Europe would be stronger if there was not constant debate here, particularly among his own Back Benchers, about an in/out referendum?

David Cameron: I think what matters is that we need to explain very clearly to our European partners that we are committed members of the European Union. We think the single market is vital for Britain’s national interest. We stand behind, and have helped to arrange, some of the key successes for the European Union in recent years, such as the oil embargo against Iran, the enlargement of the EU and the completion of the single market—those are all British initiatives. But I think it is perfectly acceptable to explain to partners in Europe that we are not satisfied with every aspect of our relationship —we are prepared to stand up and defend Britain’s national interest.

Peter Bone: Does the Prime Minister notice the difference between coming back from this European summit and coming back from some of the others? There is hardly anyone on the Opposition Benches to support their leader, but on the Government Benches, the Conservative party is united in supporting the Prime Minister.

David Cameron: I take it from that that even Mrs Bone is satisfied by the weekend’s activities, and that makes me a happy man.

Nick Smith: Voters in Blaenau Gwent support the EU, but do not want us to be a soft touch. They want investment in infrastructure projects in Wales and in research spending, and they want a big reduction in farm subsidies. Will the Prime Minister support continued investment in infrastructure projects in Wales?

David Cameron: Yes, I do support infrastructure investment in Wales and I do support the EU having cohesion and structural funds, but those funds have to be affordable. As I have said, I think that the better-off countries have to be honest about those countries that joined the EU as part of enlargement with a realistic expectation that some of their infrastructure was going to be brought up to scratch and, crucially, that they were going to be connected with the rest of the EU, when, of course, some of them have had previous economic connections heading in other directions. We should stand by those commitments.

Mark Pritchard: I congratulate the Prime Minister on standing firm on round one of the negotiations, but the budget talks underline how, over nearly four decades, the United Kingdom has lost its independence and the House of Commons has lost
	its sovereignty, given that any subsequent budget deal proposed by Her Majesty’s Government can be effectively vetoed by 26 other member states.

David Cameron: Where I agree with my hon. Friend is that I think there have been too many occasions where issues have gone to qualified majority voting rather than majority voting, and so the veto, as it were, has been given away in too many areas. Where I would not agree with my hon. Friend is that I think that Britain does benefit from our membership of the single market. It is important, in our national interests as a trading nation, that we do not only have access to that market, but help write the rules of that market. In that regard, I think the single market is very important for the UK.

William Bain: Can the Prime Minister tell us whether his coalition of allies on Europe includes both the Mayor of London, who believes that an in/out referendum on EU membership would be a bad idea, and his Education Secretary, who believes we should be quitting the EU altogether?

David Cameron: The hon. Gentleman is a little bit out of date, as the Mayor of London has chosen a visit to India to make it clear how much he supports my policy.

Robert Buckland: As an enthusiastic European, may I congratulate my right hon. Friend on continuing to engage closely and constructively with our colleagues, and on building coalitions and consensus? May I urge him, in the months ahead, to carry on working particularly closely with the German Government to make sure that the progress made this weekend can be consolidated?

David Cameron: I will certainly continue to do that work. On the issue of the EU budget, I think there is a good reason why that coalition should stick together and push hard for a budget that, yes, is about growth, but comes in far lower than where it is today. I will work very hard to try to make that happen.

Helen Goodman: I am afraid that I am still not quite clear what the Prime Minister’s view on a referendum is. Is it that he thinks it is not a good time now because of the problems in the eurozone, or does he take the view that it would never be right to have an in/out referendum?

David Cameron: My view is that Britain should be looking for a different and better settlement between Britain and the EU. That is something we can push for, because Europe is changing. The single currency is driving change in Europe. When we have achieved that new settlement, we should seek fresh consent for it—and, yes of course, that could include a referendum.

Chris Heaton-Harris: I also congratulate the Prime Minister on gaining so much support in these negotiations—this, not signing off the accounts of the Commission recently and other negotiations have shown to those living in the Brussels bubble that it is not business as usual when they deal with Britain.
	May I urge him to continue pushing for reductions in the various headings and especially to look at the EU quangos being set up?

David Cameron: I thank my hon. Friend for his remarks. He makes a good point. Given what we have done in the UK, such as abolishing or merging about 200 quangos and cutting central Government Departments’ own spending by about 30% in some cases, there is clearly room in the EU—not just in the Commission but in the other institutions—to find proper savings in cost and bureaucracy. We should continue pushing at that. The seven-year multi-annual financial framework provides the one moment when we really have the opportunity to drive home the advantage and make those cuts.

Bill Esterson: One more time, then: does the Prime Minister agree with those in his party who want a referendum, or does he agree with those in his party who do not want a referendum?

David Cameron: I think I have already made the position clear.

Philip Hollobone: My constituents are appalled that the European Commission should propose a budget with no administrative savings whatsoever, at a time when every Government in Europe are trying to cut back on unnecessary expenditure. Given that these people are clearly living in a parallel universe, what chance is there that they will advance administrative savings before the next budget round?

David Cameron: I am afraid it is worse than my hon. Friend says. According to so-called heading 5 —administrative costs—between 2007 and 2013 the EU was spending €56.5 billion under that heading, but the proposals from the Commission and the presidency of the Council were to increase that figure to €62.6 billion. Far from just freezing the figures, they were looking to increase them. That is one reason why I think it is perfectly possible to make a cut in their proposal. That is not unrealistic or tokenistic, or just some populist urge; it is a proper way of saving several billion euros and getting an affordable budget.

Gemma Doyle: The Prime Minister cannot even galvanise a coalition of opinion in his own party, so I am not sure how he expects to galvanise a coalition of countries. Given that his own opinion is as clear as mud, how will he deal with the constant debate on his own Benches about an in/out referendum?

David Cameron: This Government are not frightened of standing up for Britain in Brussels. The last Government gave away part of the rebate and got absolutely nothing in return; they joined up to the bail-out fund for absolutely no reason; and they gave away our opt-out from the social chapter and got nothing in return. They just turn up in Brussels, give in and show absolutely no backbone.

Martin Horwood: I, too, commend the Prime Minister for his statement. Does not his commitment to negotiation and building alliances with
	other Governments demonstrate real British leadership in Europe, in contrast to the tub-thumping opportunism from the Labour Front Bench?

David Cameron: I agree with my hon. Friend. It was an extraordinary performance from the Leader of the Opposition to come here one day and tell us he was one of Britain’s leading Eurosceptics, only to go to the CBI and say that he was more pro-European than Tony Blair. He has been shown up as a complete opportunist.

John Baron: Our letter in June, signed by 100 Conservative Back Benchers, called on the Prime Minister to legislate in this Parliament for a referendum in the next Parliament on our membership of the EU. The Prime Minister declined but said that he wished to continue discussions. In congratulating the Prime Minister on standing up for Britain, may I ask if he would allow us to have a meeting to discuss this matter, further to our letter?

David Cameron: I am always happy to meet my hon. Friend, who I know has strong views on this issue. He favours an in/out referendum and voting out, which is where he and I do not agree. I am happy to have that conversation with him, but I think it makes much more sense to look at the new settlement we would like to achieve within the EU before seeking consent for it. I do not think that legislating in advance is the right way forward, but I am happy to discuss it with him.

George Eustice: I welcome the statement. The Prime Minister has been absolutely consistent on this issue for two years. Rather than walking away from our allies, as some urged him, he stuck with them and expanded the alliance for a real-terms freeze. Does he agree that if we were to limit the scope of structural funds and reduce the deadweight costs of recycling between richer countries, we could not only reduce the EU budget, but allow countries such as Britain to have more money to spend on their own independent regional policy?

David Cameron: My hon. Friend makes an extremely important point. If we can encourage the better-off countries in Europe to take that approach, we can do exactly as he says and restrict the EU budget, but ensure that those countries that joined the EU with an expectation that they would get structural and cohesion funds to update their infrastructure can get those funds. That is important.

Chris Kelly: I congratulate my right hon. Friend on once again doing the right thing by the hard-working taxpayers of Dudley South, unlike Labour. Is bamboozling and attempting to bully Heads of Government during such negotiations while depriving them of food and sleep for days at a time really any way to run a union of nation states?

David Cameron: I thank my hon. Friend for his support. He makes an important point about the working methods of the European Union, where meetings seem to be held at extremely late hours—although I have to say that, having gone to European Councils for two and a half years, there is certainly no experience of being starved of either food or drink.

Margot James: I congratulate the Prime Minister on the excellent progress he has made in forming an alliance of net contributors both in the run-up to and during the budget negotiations. Does he welcome, as I do, the closer relationship with Germany, which Der Spiegel has aptly dubbed “Merkeron”?

David Cameron: I am grateful for my hon. Friend’s support. I think it is a bit premature to raise this new spectre, as it were, but I certainly enjoy working closely with the German Chancellor, and there are many areas—not just the EU budget—where we agree very forcefully.

Anne Main: I do not think I have a particularly odd postbag, but I have never had one letter, e-mail, conversation or text that has encouraged me to ensure that we keep up the EU wine budget, ensure that the bureaucrats have a comfy lifestyle and increase their budget left, right and centre. The Brussels sprouts and turkeys of Europe will not be voting for Christmas. I congratulate my right hon. Friend on his firm stance and say more power to his elbow. I believe that my constituents are typical.

David Cameron: I am grateful for my hon. Friend’s support. On this side of the House at least we will go on arguing for a tough settlement.

Christopher Pincher: Does my right hon. Friend recall the warning given by Aneurin Bevan—one Labour figure who knew how to stand up in Britain’s interest—who said that it is dangerous to send a British Foreign Secretary
	“naked into the conference chamber”?
	With respect to retaining our veto as a weapon in our negotiating armoury, does the Prime Minister think the Leader of Opposition could benefit from a bit of Bevan?

David Cameron: I think the Leader of the Opposition could benefit from a little bit of time with his socialist colleagues in the European Parliament, because they have done so much to try to undermine all of us who want to see a tough budget settlement. They are calling for a 5% increase, getting rid of all the rebates and having a financial transactions tax. That is what the socialists stand for in Europe and if the Opposition do not agree, they should have the courage to do what we did and leave their group.

Gavin Williamson: I want to know from the Prime Minister whether he thinks we would have given away all our rebate or just most of it if the Leader of the Opposition had been in charge of our negotiations.

David Cameron: I do not think our rebate would last long with the Labour party. Tony Blair—the last Labour Government—gave away the rebate, in return for which they thought they had secured a promise for reform of the CAP, but they got absolutely nothing in return. It was a terrible piece of negotiation, and one, I am afraid, for which we are still paying the price.

Sarah Wollaston: Far from being isolated in Europe, the Prime Minister has plenty of allies. Does he feel it was at all helpful to be able to go to
	Europe and demonstrate the strength of feeling of this House? Will he set out when this House—and more importantly the British people—will be able to see his proposals for a new settlement on our relationship with Europe and when the British people will be able to give their consent?

David Cameron: I do not think that anybody in the EU doubts the very strong views of this House of Commons and of the British public about our relationship with Europe and the fact that we should not be having big increases in the EU budget. That is well understood and this Government reflect that very clearly, unlike the last Government, who endlessly gave away our money. I have explained that I will be saying more this year about the new settlement that we are seeking in Europe.

Guy Opperman: People in Northumberland will be delighted that it is this Government who are keeping the rebate, stopping the budget rise and working with the fiscal sensibles in Sweden, Holland and Germany. Does the Prime Minister agree that fiscal restraint and constraint are gradually becoming the prevailing argument in Europe?

David Cameron: My hon. Friend makes an important point. We must work hard to keep this alliance together, because there are many countries and parties in Europe that want to see an even bigger EU budget. Sadly, that includes the socialist party, which Labour belongs to. It is campaigning and fighting for an increase in the budget. This is what the leader of the European socialists says:
	“If the EU budget is decided on the basis of Van Rompuy’s latest proposal—or an even worse compromise—it will be a budget of broken promises.”
	That is the policy that Labour is signed up to, and it is only this Government who are preventing it from happening.

David Rutley: I congratulate the Prime Minister on taking a strong lead, on putting the spotlight firmly on economic growth and on placing trade on the EU agenda. Will he tell the House what steps the EU is taking to tackle the burden of Brussels-backed bureaucracy, just as this Government are doing here in the UK in relation to historical home-grown regulations?

David Cameron: I am afraid that the answer to that is not nearly enough. There is some good news, which is that, at the last European Council before this one, we secured a commitment from the European Commission to examine existing regulations and to try to remove the most burdensome of them. It was disappointing, however, that at this Council, the European Commission would not brook any idea of reducing its bureaucracy or its budget. As I have said, the proposals being put forward were to increase the budget of the central administration, not to reduce it.

Neil Parish: I congratulate the Prime Minister on standing up for Britain and on having strong allies in Europe. The Council of Europe is beginning to see the light in regard to expenditure, but the culture of the European Commission is always
	to spend more and more. If it is good enough for this Government to cut back on Whitehall, why is it not good enough to cut back on the European Commission?

David Cameron: My hon. Friend makes an important point. That point was made not just by me but by a number of other leaders of Governments. We were talking about the tough pension changes, budget changes, administration changes and cuts that we have had to make, and it is just not acceptable for Brussels to continue as though nothing has changed.

David Burrowes: Before the European Council, the shadow Chancellor kept going on about the Prime Minister being weak and isolated. Following the Prime Minister’s strong leadership on budget reform, in alliance with countries such as Germany, Holland and Sweden, who in this House does my right hon. Friend now think is weak and isolated on Europe?

David Cameron: First, may I congratulate my hon. Friend on his absolutely superb piece of Movember fundraising? He would not look out of place in a spaghetti western, and I am sure that a number of film studios near Enfield will want to call on his services. So excited was I by his facial hair, however, that I have forgotten his question—[ Laughter. ] Ah, yes! He is absolutely right. The last Labour Government gave away our rebate, and if they got back in again, they would give away the other half.

Jane Ellison: May I congratulate the Prime Minister on the important work that he did this weekend, particularly the alliance building? It is clearly absurd of the EU to say that there can be no cuts in the central administrative budgets when, up and down this country, councils such as mine in Wandsworth are finding ways of doing it at local government level. Surely it is inconceivable that it cannot be done at EU level.

David Cameron: My hon. Friend is absolutely right. I have set out in my statement and also at the European Council a number of specific steps that could be taken on pay bills, on pensions and on automatic promotion. Frankly, however, perhaps the best way of getting the Commission to engage in the reality is to give it a cut that it has to achieve and then challenge it to do so. That is what we have done with some Government Departments. We have said to them, “Okay, you know your Department and your departmental spending better than anyone. Here is the sort of reduction you need to achieve.” There is not an organisation or business in the world that has not had to budget for a 10% or 20% reduction over the past few years, and we should ask the Commission to do that.

Neil Carmichael: This statement certainly demonstrates that the building of an effective alliance on the European Council really can deliver some results. Through good leadership, that is clearly benefiting this country. Does the Prime Minister agree that the next big thing to do is to make sure that we have a truly competitive Europe and that the alliance that he has created should be used as a powerful mechanism to demonstrate what we need and how to get it?

David Cameron: My hon. Friend is entirely right. That is why we spent so much time putting together the so-called like-minded group, particularly over single market issues where we have not only the traditional allies of Denmark, Holland and Germany, but the Baltic states, the Nordic states and now the Italians and the Spanish, along with others including the Hungarians and the Czechs. They all support single-market and growth-oriented measures, which is very encouraging.

Marcus Jones: Can my right hon. Friend reassure us that he will never agree to any new EU taxes, particularly to an EU-wide financial transaction tax?

David Cameron: I can certainly give my hon. Friend the assurance that we do not support new EU taxes. One of the ways in which particularly the left in Europe has endlessly tried to argue for higher budgets for more spending is by altering the so-called “own resources” and coming up with new taxes. We oppose a financial transactions tax. Some countries may well go ahead and introduce it in any case. If they do, as far as I am concerned, that is their own decision and we will not take part in it.

Andrew Jones: The current multi-annual financial framework has a commitment of €994 billion; the van Rompuy proposal cuts that to €973 billion. Does my right hon. Friend agree that this is progress, but still not good enough?

David Cameron: My hon. Friend is entirely right. The Commission initially came up with a proposal that was over a trillion euros. One problem has been the need to argue against a proposal that is clearly wrong and wrong-headed and bring it back to some sort of sanity before it becomes possible to argue about getting a proper outcome for the budget. It is not often that we hear politicians say this, but what is lacking in some cases is a Treasury approach of going through these budgets rather than having people like the permanent staff all sitting around in the Commission and in the Council protecting their own budgets rather than looking at the savings that should be made.

Andrew Bridgen: Did my right hon. Friend see the headline in last Friday’s Der Spiegel online, which read “Cameron leads revolt of the net contributors”? Of particular interest was the second online comment, which read “Wir sind heute alle Engländer! Danke Herr Cameron”—today we are all British; thank you, Mr Cameron. I do not think that we are at all isolated in Europe.

David Cameron: It is impressive to see Conservative MPs speaking German in the House of Commons. I am impressed by my hon. Friend and I take what he said as a compliment.

Jason McCartney: I praise the Prime Minister’s tough and principled stance at the EU summit. Those are not just my words—they are the words of some of my constituents who e-mailed me over the weekend. They had just been on a cruise around the Baltic, where they spoke to many citizens who were also fed up with being fleeced by the EU. As
	the Prime Minister goes back to the summit in the future to negotiate and get control over this bloated EU budget, will he realise that he has the full support not only of the British people, but of hard-pressed taxpayers in the EU, too?

David Cameron: I am grateful for my hon. Friend’s comments. He makes an important point—that we should use the time between now and the resumption of this European Council to try to make sure that the voice of people in Europe who want a tougher budget is actually heard, not just in Britain, but in other countries, particularly the net contributors.

Jessica Lee: My constituents, the good people of Erewash, are keen to know that the great British rebate, initially secured under Margaret Thatcher, remains safe in the Government’s hands. Can my right hon. Friend offer some reassurance that this important aspect of the budget remains a priority at the negotiating table?

David Cameron: My hon. Friend is absolutely right. It must remain a priority for Britain to make sure that there cannot be changes to our rebate. What happened at this European Council is that the disagreement about the spending figures dominated the discussions, so we did not really get on to the whole conversation about rebates and the so-called own resources and income side. I was very clear, however, that when we get to that discussion, there cannot be changes to the UK rebate.

Stephen Mosley: The Commission and many EU countries have a vested interest in always increasing EU budgets. Has the Prime Minister given any consideration to whether there might be a better way of agreeing EU budgets in future?

David Cameron: My hon. Friend makes an important point, to which I referred to earlier. When a rotating president was responsible for trying to put the budget deal together, at least we felt that European taxpayers were getting more of a look-in than we do now that it is being done by the European Council and the European Commission. I think we need to make sure that the voice of the people of Europe, who want to see tough budgets, is properly heard. There may be more that Parliaments can do in scrutinising European spending and helping to come up with some sensible savings, which we can then take to the Council table and get agreed.

Mr Speaker: Order. I am extremely grateful to the Prime Minister, the Leader of the Opposition and other colleagues. The fact that 53 Back Benchers were able to take part in 44 minutes of exclusively Back-Bench time is a comment on succinctness.

Flooding

Owen Paterson: With permission, Mr. Speaker, I shall make a statement on flooding.
	The House will be aware of the exceptional rainfall that has been experienced over the last few days, and will also be aware that as a result some areas across the United Kingdom have been flooded and others continue to be at risk of flooding. The Environment Agency currently has 197 flood warnings and 291 flood alerts in place in England and Wales.
	Tragically, three people lost their lives over the weekend. Two were men whose cars were caught up in flood water in Somerset and Cambridgeshire, and the third was a woman who was killed in Devon by a falling tree. I am sure that the whole House will wish to express its profound sympathy to the families and friends of those who have lost loved ones.
	Heavy rainfall is not unusual at this time of year. However, we experienced bands of low pressure over the weekend, bringing often intense rainfall on catchments that are now saturated. Areas in the south-west of England, Wales and the midlands received 20 to 30 mm —over an inch—of rain in most places, and up to 50 to 60 mm—over 2 inches—fell in 24 hours elsewhere. Persistent rain will continue to affect much of northern England, south-east Scotland and north Wales today.
	As a result of the rain, there has been significant river and surface water flooding in Cornwall, Devon, Wiltshire, Worcestershire, the midlands, Yorkshire and Wales, and there is a continued risk of significant flooding in parts of north-east England and north Wales. More than 900 properties have been flooded, of which up to 500 are in the south-west, more than 200 in the midlands and more than 100 in Wales. A great many people have been evacuated, and the numbers may well increase given the further rain forecast for today and early tomorrow.
	The Under-Secretary of State, my hon. Friend the Member for Newbury (Richard Benyon), visited Malmesbury in Wiltshire on Sunday, and saw for himself the damage caused by the flooding to homes in the centre of the town. I visited Northampton on Friday and Exeter and Kennford earlier today, and saw some of the devastation caused by the flooding there. I spoke to families who had had to leave their homes with their children in the middle of the night, and people who had flood water a good way up their walls. I really do want to praise the local Environment Agency and council staff, because this was a real example of partnership working in action.
	I also feel desperately sorry for the residents of Kempsey, in Worcestershire, whose properties were flooded when the local pumps failed. The Environment Agency will be carrying out a detailed investigation into what happened.
	Many areas, such as the Somerset Levels, have experienced significant flooding of farmland. That has had a major impact on local farmers, who have lost grazing land and crops. In Somerset, which is still an area of serious concern, the Environment Agency is already working with the community to review the floods that have happened during 2012, and to consider how flood water could be better managed. The flooding
	has also disrupted road and rail networks. Many roads were closed, particularly in the south-west, in Solihull, across north Yorkshire, in Gloucestershire—including the M5—and in other areas, including County Durham and Teesside.
	The main concerns for Network Rail have been the routes between Exeter and Taunton and between Exeter and Yeovil. The route between Exeter and Taunton was badly affected, with parts of the track under 2 feet of water. Buses have replaced trains in a number of areas. Some routes have reopened, although there may still be delays to some journeys. I saw some of the damaged track for myself, and since my visit I have discussed these issues with my right hon. Friend the Secretary of State for Transport.
	I extend my sincere thanks to the many people who responded so magnificently to these events. They include staff of fire, ambulance, police and other rescue services, local authorities, the Environment Agency, the voluntary sector and local communities. I appreciate how hard everyone has been working, and how difficult it is for those whose homes and businesses have been affected. I assure the House that the Environment Agency and its local emergency partners, including local authorities, are working round the clock and doing all they can to prevent flooding in areas currently at risk. My officials have been working closely with other Departments throughout the recent events.
	Protecting our communities against flooding is a vital priority for the Government, and I am pleased to say that over the past few days nearly 50,000 properties have been protected by recently built flood defences. The Environment Agency issued flood warnings to over 93,000 properties, and such warnings are often crucial in giving people time to protect their properties or move precious belongings to somewhere safe. More than 1.1 million households have now signed up to the Environment Agency’s flood warning system, and I encourage others at high flood risk to do the same.
	Nationally held flood rescue equipment was deployed to support local partners in Devon and Cornwall; six high-volume pumps were used and four boats were deployed, managed locally by the fire and rescue service national co-ordination centre. As flood waters recede, we will move into the recovery effort, which will need support from across central, regional and local government, as well as from businesses and voluntary organisations. I know that local communities are pulling together as recovery operations begin in earnest.
	The Secretary of State for Communities and Local Government will be activating the Bellwin scheme of emergency financial assistance to help local authorities with the immediate costs associated with protecting life and property in their areas. The scheme will reimburse local authorities for 85% of their eligible costs above the threshold. Government officials will also discuss recovery arrangements with local authorities in the areas affected.
	The recent flooding has been a tragedy for those affected, and I finish by paying tribute to the wonderful community spirit that I, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury, and Members across the House have witnessed as communities rally round to support people in need. I shall, of course, keep the House informed of any further significant developments.

Mary Creagh: I thank the Secretary of State for his update.
	I begin by paying tribute to the emergency services that worked to evacuate homes, rescue those who were stranded and keep people safe this weekend. I echo the Secretary of State’s thanks to staff of the Environment Agency and local councils who worked all weekend—and throughout the night on Saturday—clearing rivers and ensuring that flood defences were activated.
	Hon. Members from across the House will wish to send their condolences to the family and friends of the three people who tragically lost their lives. With two months’ worth of rain set to fall in the north of the country today, we are not yet in the clear. The communities affected face months of disruption and upheaval. People who were cleaning up after the July floods have been flooded again, and some have been flooded more than once this week. Pubs that were looking forward to their busiest period are throwing out carpets and cancelling bookings.
	The Department for Environment, Food and Rural Affairs classes areas as being at low, medium or high risk of flooding. Have this week’s floods triggered the medium-risk threshold that activates the Cabinet Office civil contingencies secretariat? Will the Secretary of State tell the House how many schools, roads, railways and businesses have been affected across the country so far, and how many people have been evacuated? How many acres of productive farmland are under water, and what estimate has he made of crop losses to farmers?
	The Secretary of State mentioned the Somerset levels, which rely on drainage boards. The Environment Agency, however, is already consulting on changes to flood management, pump houses and maintaining river courses. Will he guarantee that those operations will be protected in future? What contact has he had with the Department for Education to ensure that children whose schools have been flooded continue to be educated? What contact has he had with the Secretary of State for Communities and Local Government on the recovery effort? Is he aware that there is no statutory obligation on fire services to respond to flood events, and does he share my concern that the current round of cuts to fire and rescue authorities, particularly in metropolitan areas, is reducing our resilience to flood events in future years?
	The Secretary of State’s predecessor, the right hon. Member for Meriden (Mrs Spelman), told the House in a written statement in June that central Government would cover 100% of local authority costs under the Bellwin scheme, yet today the Secretary of State has announced that just 85% of their costs will be met in the case of the latest floods. Why is that?
	Councils have just one month after a flood incident to lodge with the DCLG a claim for reimbursement under Bellwin. However, Bellwin covers only the costs of immediate action to safeguard life and property, such as evacuation and rehousing, not the capital costs of road repairs. Just three of the 20 areas flooded last summer have reached the Bellwin threshold to receive any money at all from the Government. Have the Government made any payments to those three councils for the costs of the June and July floods? If, as I suspect, they have not, when can councils expect that money?
	What measures has the Secretary of State put in place to help the other 17 councils whose claims did not meet the Bellwin threshold? Whether the Government cover 85% or 100% of the costs, their failure to help 17 of the 20 councils affected in the summer is no help at all. What funding will he put in place for major capital expenditure on damaged roads?
	After the 2007 and 2009 floods, the Government set up the flood recovery grant as a one-off payment to councils to help households seriously affected by the floods. This Government have chosen not to help communities in that way. Why is that?
	What support will the Government give to those who are under-insured or uninsured? The answer has to be more than warm tweets from the Prime Minister. As we move from response to recovery, flood-hit communities are growing more and more anxious about the availability and affordability of flood insurance. The Secretary of State’s predecessor told the House in June that
	“we are at an advanced stage in intensive and constructive negotiations with the insurance industry”.—[Official Report, 25 June 2012; Vol. 547, c. 26.]
	Yet the Association of British Insurers has stated today that a deal on the future of flood insurance has “stalled”. We were promised a deal in the spring, and then by July. It is now November. What has happened? If the deal is not done by the time of the autumn statement in just nine days, the risk of people being unable to insure, mortgage and eventually sell their home will rise exponentially. We must not have whole communities blighted because the Chancellor refuses to negotiate in good faith. When will he get a grip on the issue?
	We know that every pound invested in flood defences saves £8 in costs further down the line, yet this Government have cut capital spending on flood defences by 30% from the 2010 baseline. They are spending less on flood defences now than we were five years ago in 2007. As a result, 294 flood defence schemes have been deferred or cancelled. Will the Secretary of State resist any pressure from the Treasury to cut flood defence spending in the next comprehensive spending review?
	Last Monday in Westminster Hall, the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), told Members that
	“while the flooding incidents of this summer were locally significant, we did not witness the devastating effects of previous years.”—[Official Report, 20 November 2012; Vol. 553, c. 93WH.]
	Communities that have been devastated by flooding should not have to listen to Ministers telling them that their experience is not nationally significant. Today and this weekend, we have once again had a reminder that floods are the greatest threat that climate change poses to our country, and flood-hit communities deserve not to have to go through that terrible experience again.

Owen Paterson: I thank the hon. Lady for echoing my tributes to the Environment Agency, councils and all those who have worked so extraordinarily hard in recent days. I thank her also for expressing her sympathies to those who have lost relations and friends.
	The hon. Lady asked detailed questions about the picture on schools, roads and crops. It is too early to
	tell, because the current weather is carrying on, and I think we had better review those questions when it settles down.
	The hon. Lady mentioned local councils. We are co-ordinating the matter carefully and meeting DCLG on a regular basis, including on the subject of fire services. She mentioned the Bellwin scheme, which we have continued in exactly the same vein as the previous Government. There is a 0.2% threshold, and we have said that we will pay up to 85% of costs. We will keep that under review and keep assessing the situation as it develops.
	The hon. Lady mentioned flood insurance. Today’s story is complete nonsense. The first meeting I had on taking office was with the ABI. We have had constructive and detailed discussions with it since, and there was a senior level meeting as recently as the end of last week. I am looking forward to receiving the ABI’s latest suggestions. We are determined to arrive at a replacement for the statement of principles that provides universality, is affordable and does not put a major burden on the taxpayer. I would like to remind the hon. Lady that the statement of principles covers 2003 to 2013, and we inherited absolutely nothing from the previous Government on this issue.
	The hon. Lady mentioned spending on flood defences, and there is a complete canard about this reduction; our reduction is 6% over the whole spending round compared with what Labour spent over its spending round. I would have thought that she would have been pleased that our partnership scheme is really working, and a range of schemes that were just on the threshold and did not make the cut will now go ahead. In the last major incident, in 2007, 55,000 homes were flooded but this time the figure is 5,000 to 6,000. That is still traumatic for those households, and I repeat that my real sympathies are with those affected. I stress that we are continuing with a major programme of flood defence schemes to reduce the number further.

Anne McIntosh: Today’s tragedy is truly of national proportions, but the response has been so much more effective after the Flood and Water Management Act 2010 came into effect. Will the Secretary of State revisit the damage done in September to the roads and bridges in north Yorkshire, which has now been made 10 times worse today? Will he also examine the impact on the community of operating theatres potentially closing at the Friarage hospital in Northallerton, as well as of school and road closures? There is something the Government could do to ease the impact of surface water flooding: introduce the regulations on sustainable urban drainage long before the deadline of 2014, which marks a huge delay from what was originally proposed.

Owen Paterson: My hon. Friend mentioned various local issues relating to schools and roads, and I can tell her that we are meeting colleagues in other Departments on a regular basis. As the local MP, it is appropriate that she should raise those issues with those Departments, but I am happy to discuss them with her separately. On the issue of sustainable drainage systems, we intend to have an implementation date of April 2014, but this has turned out to be extremely complicated and we will have to work this out in detail to make sure we get it right.

Nick Brown: Will the Secretary of State, together with his colleagues in government, examine the case for making targeted use of flood recovery grants for those in the most unhappy of circumstances?

Owen Paterson: I am very happy to look into that. If the right hon. Gentleman would like to write to me detailing a specific example, I am happy to take it up.

Stephen Gilbert: Not only are hundreds of homes in Cornwall flooded now, but they were flooded two years ago. What plans does the Secretary of State have to ensure that flood insurance remains affordable and available for communities, such as mine in Cornwall, that have been devastated again and face the risk of not being able to get insurance?

Owen Paterson: We are clear that we want to arrive at a scheme that is affordable and is as comprehensive as possible, but that is not a burden on the Treasury. This is a real conundrum and we are determined to find a solution. We hope that we will find something that is better than the existing statement of principles.

Ben Bradshaw: The Secretary of State talks about something that is not a burden on the Treasury, but no country in the world has a free market in flood defences, as he knows very well. However, I thank him for coming to Exeter today and, through him, his Minister, for keeping in touch with me by phone over the weekend. The Secretary of State will know that Exeter narrowly escaped a flooding disaster over the weekend. It tops the south-west Environment Agency’s list of priority schemes for upgraded flood defence. The city and county councils have come up with money to help fill the shortfall left by his Government’s cuts. Will he now get together with the Environment Agency to come up with a scheme urgently, so that Exeter is safe in the years to come, given the greater threat of climate change?

Owen Paterson: I thank the right hon. Gentleman for his comments and his question. I pay tribute to his constituents, who have rallied round magnificently in very difficult circumstances, particularly all those in the services whom I met today. I met his council leaders and stood on the bridge looking at the scheme, which has protected 6,000 properties in the heart of Exeter. We should pay tribute to that scheme, which is most effective. I was interested to learn that councils are thinking of taking up our offer of a partnership and are working with the Environment Agency, topping it up and making a scheme that is targeted at the local requirements. Such schemes will be decided on in the coming months.

Sarah Newton: Those who have suffered terribly from flooding in Cornwall are uppermost in my mind. Will my right hon. Friend join me in paying tribute to the partnership between the emergency services in Cornwall, which do such a magnificent job, and the Environment Agency in particular, which introduced, with the Government’s help, a new programme that defended many homes and businesses in Truro from flooding?

Owen Paterson: I am very happy to join my hon. Friend in paying tribute to the Environment Agency and everyone in those different services and councils who have worked so hard on the ground and made an enormous difference.

David Anderson: The Secretary of State quite rightly praises the work of the emergency services. What will we do going forward given that fire services in places such as Tyne and Wear are having their budgets reduced by 35%, 1,500 local authority workers in Gateshead have been sacked and the Environment Agency in the north-east faces a 20% cut in resources? How will we manage these situations then? When will he stop putting ideology before practicality?

Owen Paterson: We have provided £2.5 million to fire authorities to help on this issue. Under very difficult circumstances—I do not want to make tiresome political points, but we inherited them from the previous Government—we have managed to hold up the investment in flood defence schemes. We are looking at a 6% reduction over the whole spending period compared with that over the previous spending period, which under the current circumstances shows the priority we are giving to these schemes.

Bill Wiggin: Will my right hon. Friend carry out a full investigation into why maintenance is not always done properly, as that causes most of the flooding in my constituency? Will he also ensure that the Bellwin thresholds work for small county councils as well as for large ones?

Owen Paterson: Several Members have raised the question of keeping drainage channels clear. If my hon. Friend has specific examples, I urge him to take them up with his local officers in the Environment Agency, who understand the matter. If he does not like that, perhaps he will grab me directly after the statement.

Yvonne Fovargue: Many people in my constituency trying to renew their yearly household insurance policies, which include protection against flooding, are now having difficulties because the statement of principles expires in seven months’ time. Does the Secretary of State not agree that the closer we get to June 2013 without an agreement, the more people will be left without that vital insurance or with paying a much higher premium through no fault of their own?

Owen Paterson: The hon. Lady is absolutely right. We want a solution to this conundrum, which is why we have been meeting the ABI regularly and why we are determined to get a good solution. There is no point in rushing into a scheme that will not work. Getting a balance is a difficult conundrum and we are determined to get it right.

Laurence Robertson: I thank the Secretary of State for his statement. He is well aware of the effects flooding has on my constituency. Is it not time to develop a national strategy to ensure that the culverts, ditches, drains and waterways are regularly maintained and cleared? Is it not also very important to stop building houses in flood risk areas? Will he assure
	me that no inspector appointed by this Government will force councils such as Tewkesbury to build houses where it is inappropriate to do so?

Owen Paterson: My hon. Friend is absolutely right—making sure all those channels are kept clear is part of the management of them. In recent days, we have seen complete and total saturation of the land and no matter how clear some of the channels have been kept, there has been nowhere for the water to go. He is quite right to mention the channels—several Members have raised that point with me—and I will talk to the Environment Agency about it.

Diana Johnson: Hull had 14,000 homes affected by the flooding in 2007 and the former Secretary of State said to me on the Floor of the House:
	“I am proud that we have found a way forward with the insurance industry that, above all, guarantees that universal and affordable insurance remains available to all, including to her”—
	my—
	“constituents.”—[Official Report, 25 June 2012; Vol. 547, c. 30.]
	Was she correct or incorrect to say that?

Owen Paterson: We are quite clear as a Government that we want to come up with a scheme that is affordable, as universal as possible and not a burden on the Treasury. We are working towards that, as was my right hon. Friend the Member for Meriden (Mrs Spelman), my predecessor.

Ian Liddell-Grainger: I am grateful that the Secretary of State mentioned the Somerset levels and glad that the Minister of State, Department for Environment, Food and Rural Affairs, my hon. Friend the Member for Somerton and Frome (Mr Heath), is in his place. One of the problems the levels have had is that successive Governments have refused to spend money on the pumps that are brought in to try to clear them, and they are having to be brought in more and more. Will the Secretary of State, after the statement, please look urgency at upgrading the pump system across the Somerset levels, which cover my constituency and that of my hon. Friend?

Owen Paterson: I am grateful to my hon. Friend for that question. I took a train through the levels this afternoon on my way back, and they looked like the Irrawaddy in spate. I must say that it is a huge challenge for any pump system to keep that huge volume of water clear. If he would like to write to me, I would be more than happy to take the matter up with local Environment Agency officers.

Bill Esterson: I note that the Secretary of State did not answer part of the question on development on floodplains. Developers in Formby and Lydiate in my constituency want to build on farmland that often floods. Will he ensure that the Chancellor and the Secretary of State for Communities and Local Government do not prevail in their desire to force through development in areas, such as my constituency, that already have a significant problem with flooding?

Owen Paterson: I am grateful to the hon. Gentleman for giving me the chance to clarify this. The national planning policy framework is absolutely clear that development should be located away from flood risk wherever possible.

Jessica Lee: Does my right hon. Friend agree that one of the consequences of the current flooding is the impact on transport links? The train I took to London last night was slightly delayed due to flooding, but severe disruption in the east midlands followed. Will he confirm that he is of course liaising with colleagues in the Department for Transport on the matter?

Owen Paterson: I am happy to confirm that at official level we are working and talking with Department for Transport officials on a daily basis. One of the first calls I made after leaving Taunton today was to the Secretary of State for Transport, who had already been on the case to get the Exeter line reopened. We hope to see services resume tomorrow.

Helen Goodman: Unpredictable weather events are one of the main consequences of climate change. Does the Secretary of State not understand that if he continues to resist the scientific evidence and refuses to take sensible policy measures to prevent climate change, his successors for years to come will have to come to this House to make statements such as the one he has made this afternoon? [Interruption.]

Owen Paterson: I wish I had such extraordinary powers. The fact is that we have to react and adapt to the weather, and that is what the Government are doing.

Nigel Adams: In recent months, and this weekend, constituents of mine have woken up to flooding. Today, loss assessors are visiting constituents in the village of Saxton and bridges are still closed in Cattal. On Saturday I visited a Kelfield farmer, Richard Bramley, some of whose land is in a floodplain designed to help protect the village of Cawood. Thankfully, the flood defences worked, but Mr Bramley has lost more than £50,000-worth of crops. As flooding is becoming increasingly frequent, does the Secretary of State agree with Mr Bramley and me that the management of the water system does not appear to be keeping pace with changing weather conditions?

Owen Paterson: That is why we are putting this huge sum of money into flood defence schemes and encouraging partnerships with local government and, on the ground, with individuals and farmers, such as the one my hon. Friend cites, working with local drainage boards and councils to ensure that there is a co-ordinated approach.

Grahame Morris: I would like to thank the Secretary of State for not blaming Opposition Members for the weather and join him in paying tribute to the emergency services, especially the fire and rescue services in the north-east, particularly in Durham and Teesside, who have been doing such a terrific job. Does he share my concern that in areas such as my constituency we are gradually losing resilience due to cuts in front-line fire and rescue budgets at a time when floods are becoming an increasingly common phenomenon?

Owen Paterson: I was in Northampton on Friday and talked to the senior fire officer there. I echo the hon. Gentleman’s congratulations, as have we all, to those in the fire service and others who have been working so hard. The reaction I got from Northampton fire brigade was that they have been thoroughly involved in evacuating a number of people, and I am sure that we will see the same sort of dedication in the north-east.

Jacob Rees-Mogg: May I join the Secretary of State in mourning the deaths of the three people, particularly the gentleman in Chew Stoke who was washed to his death in spite of the very valiant efforts of the fire brigade to rescue him? May I thank the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), who has assured Bath and North East Somerset council that it will be given every help following the floods? May I raise an issue that has been brought to my attention by constituents who are concerned that silt is not being dealt with because of esoteric wildlife issues, and ask whether this policy will be reconsidered?

Owen Paterson: I am grateful to my hon. Friend for his comments and wholly endorse them. The issue of keeping watercourses clear has been raised by other Members. I am absolutely clear in my own mind that the purpose of these watercourses is to get water away, and I will be discussing the issue with the Environment Agency.

Ian Lavery: The Secretary of State dismissed the discussions between the ABI and the Government on flood risk insurance as utter nonsense. He said categorically that the Government face a conundrum. Perhaps he can tell the House what that conundrum is.

Owen Paterson: I am glad to clarify my earlier comments if the hon. Gentleman wants me to. What I said was nonsense is the concept that the talks had stalled. Only at the end of last week we had, at the most senior level, a very constructive meeting with the ABI, as has been going on in recent weeks. We are quite clear—I will repeat this again—that we want to get to a system that is affordable, that is as comprehensive as possible—

Ian Lavery: What is the conundrum?

Owen Paterson: I will explain the conundrum to the hon. Gentleman if he will stop interrupting. We also want a system that is not a burden on the Treasury. That is not an easy series of demands to meet. We are absolutely determined to keep working in a constructive manner with the ABI, and we are currently waiting for it to come back to us. However, no doubt to the hon. Gentleman’s disappointment, I am not prepared to negotiate on the Floor of the House of Commons.

Julian Smith: Having been hit particularly badly earlier in the year and now with these floods, North Yorkshire county council is very worried about capital expenditure not being included in the compensation scheme. Will the Secretary of State arrange for civil servants in his Department to have a direct conversation with the council, which is having trouble getting an answer on this?

Owen Paterson: Probably the best thing would be for my hon. Friend to have a meeting with my hon. Friend the Under-Secretary to go into the detail of the case.

Jeremy Lefroy: What consultations is my right hon. Friend having with local councils and the Highways Agency to ensure that existing roads that do not have sufficient surface water drainage capacity will be made a priority for investment?

Owen Paterson: As I said, we are having daily meetings with other Ministries such as the Department for Transport. I talked to the Secretary of State for Transport this afternoon, and we will continue in that vein. If my hon. Friend is concerned about a particular road, he should write to the Secretary of State to take it up directly with him.

Nick Gibb: I thank the Secretary of State for his statement and for his reassurance on the renewal of the statement of principles. On 11 June this year, Bognor Regis and Littlehampton were severely affected by flooding, with hundreds of homes flooded following 36 hours of intense rainfall. West Sussex county council, as the lead statutory authority, is about to publish a detailed report into the implications of those floods. Will he ensure that Southern Water is encouraged and enabled by the regulator to allocate all the capital that is needed to upgrade surface water drainage systems so that weaknesses in the current system are strengthened and people can feel safe in their homes?

Owen Paterson: My hon. Friend raises a very important point—the key role played by water companies, which have an absolutely essential task in managing water. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury and I will be happy to discuss the particular case that he mentioned.

Mel Stride: May I thank my right hon. Friend for this morning visiting Kennford, a small village in my constituency that has been overwhelmed by the flooding, and affording me the time to discuss the situation with him? Will he join me in thanking in particular Martin Weiler and his team at the EA, who have done such extraordinary work in the village in reassuring people, providing information, and so on?

Owen Paterson: I am sorry that my hon. Friend could not be there in person, but I much appreciate him ringing me in the car as I arrived. I would like to pay tribute to Martin Weiler, his team and all those from the Environment Agency whom I met and spent time with when I went to Kennford. I want to stress how completely awful it was to see those houses in Kennford. There was a thick black line about three feet off the ground, everything in people’s downstairs rooms was completely wrecked and all the electrical appliances were gone. All of that happened in an extraordinarily short amount of time—people were hit by the rapidly rising water over the course of about an hour on Saturday evening. It was shocking and I pay tribute to all the local agencies that I met, the local councils and the local community for how they are pulling together.

Neil Parish: I thank the Secretary of State and Ministers for keeping us informed by phone about the problems. I have had flooding in Bampton, Tiverton and Cullompton, and the canal has broken its banks at Holberton. Feniton has now flooded in 2007, 2008 and 2012. One of the problems is that, although the local authorities have resisted more houses, the inspector has allowed them, despite flooding in the village. We need to ensure that inspectors have the same views on flooding as the Government and local authorities.

Owen Paterson: I pay tribute to my hon. Friend’s constituents, who are stoic under these very difficult circumstances. I stress that the NPPF is absolutely clear on this: it is the intention that developments should not happen on floodplains. He is absolutely right to raise the issue and he should bring it to the attention of all those involved in planning locally.

Craig Whittaker: One of the biggest challenges for residents in Calder Valley who suffered from flooding over the summer is ongoing insurance for both business and residents. On the scheme to replace the statement of principles to ensure there is affordable insurance for those properties most at risk, will the Secretary of State update the House on whether the Government will consider assisting the industry by providing a temporary overdraft, to be paid back with interest, for the proposed not-for-profit scheme, which, of course, would not be a burden on the taxpayer?

Owen Paterson: I am grateful to my hon. Friend for trying to tempt me into negotiating in public but, as I have said many times today, we are involved in a long negotiation with the ABI. We had a very constructive meeting at senior level last week, are waiting for its counter-proposals and I am afraid that I cannot go into the sort of detail that he has asked me to on the Floor of the House.

Stephen Mosley: Given your first-hand experience of this flooding, what advice would you—sorry, Mr Deputy Speaker; I mean the Secretary of State—give to those who seek to build on floodplains?

Owen Paterson: I am not sure what plans you have, Mr Deputy Speaker, but I would strongly advise all those who are considering developments around the country to look very hard at the NPPF, which says that developments should not happen on floodplains wherever possible.

Robin Walker: I thank the Secretary of State for his statement and, in particular, his concern for residents in Worcestershire who have been flooded. Worcester city suffered badly in 2007 but, partly as the result of improved flood defences, I have yet to hear of a home being flooded there and hope that that will not happen. My constituents are concerned about their ability to get insurance, as are local businesses. May I offer my strong support to the Secretary of State in his attempts to get a deal with the insurance companies as soon as possible?

Owen Paterson: I am grateful to my hon. Friend. I was in his city on Friday evening at a dinner for one of his parliamentary neighbours and discussed the issue with
	people who may have been constituents of his. He is right that we have to work through this negotiation and get a good deal on insurance that is satisfactory to all parties.

Adrian Sanders: In addition to those that the Secretary of State has already praised, could he mention South West Water, the transport companies, which have done a great job today, and, crucially, the local media? Will he also address the public concerns in Devon about the resilience of our infrastructure, particularly Cowley bridge, which controls rail in and out of the county to Paddington, the Clennon valley pumping station in my constituency, which deals with most of the sewerage in Torbay, and roads throughout Devon that were cut off from the rest of Devon at some point over the weekend?

Owen Paterson: I went to Cowley bridge to look at the damage to the railway line and I am pleased to say that it will be mended by tomorrow, which will be a triumph for those involved, because I was told that something like 200 tonnes of aggregate had shifted. The hon. Gentleman is right to raise a number of detailed issues, and they will have to be worked through by local councils and agencies. I was impressed by the resilience of all those affected by events in recent days and I have every confidence that they will see their way through this situation.

Harriett Baldwin: West Worcestershire has had the benefit of six new flood defence schemes since 2007. They have protected 360 homes and more than £8 million has been spent on them. Sadly, the Kempsey pump failed on Sunday morning, and I pay tribute to the engineers and emergency workers who came out in the middle of the night to fix it. When the investigation discovers the cause of the incident, will the Environment Agency seek compensation from the manufacturers of the pump, and how will it get that compensation to the home owners whose homes were flooded? How will the situation resolve itself in the long term in respect of the insurance for those homes?

Owen Paterson: I am grateful to my hon. Friend for raising the situation in Kempsey. It was sickening that, according to my knowledge, the pump failed at 4 am. The scheme was designed to protect 70 properties, but 20 of those were damaged. A detailed investigation into what happened is taking place. I congratulate the Environment Agency on getting the pump going again. I believe that it had tripped out. There will be detailed results from the investigation and we will take the matter further when we see them.

Neil Carmichael: I congratulate and thank the agencies in Gloucestershire for dealing so well with the various transport challenges and the localised flooding. Will the Department consider further attenuation schemes, which have some attraction in my constituency?

Owen Paterson: My hon. Friend raises a good point. During my train journey back from Taunton today, I saw graphically the extraordinary volume of water that has landed in such a short time. The areas that have been set aside as soaks have become completely saturated.
	He is right that having such small-scale schemes down the road can be very helpful and we will certainly look at that.

Simon Hart: What discussions is the Secretary of State having with his colleagues in the Welsh Government, given that the management of Welsh rivers has a profound effect on the risk of flooding in England?

Owen Paterson: My hon. Friend makes a good point. Rivers do not respect political boundaries. We are keeping in touch with all Ministries and Government agencies.

Peter Bone: I thank the Secretary of State for coming to the House and informing us in such detail of what is happening and what he has been doing over the past few days. Flooding is occurring on the embankment in Wellingborough. Northamptonshire’s fire brigade and local councils are doing an excellent job. Like other Members, I ask the Secretary of State to look again at the issue of building on the floodplain, because regional spatial strategies forced councils to have residential homes in areas where they opposed them.

Owen Paterson: I went very close to my hon. Friend’s patch on Friday and saw the scheme that worked incredibly effectively in protecting Northampton town. The Nene was tamed. He rightly says that the huge wet area was saturated. I saw a permanent caravan site that had been badly flooded and a large number of people had been evacuated. I pay tribute to all the agencies in his area that I met: the Environment Agency, the police, the fire service and the local council. He is right that it is completely barmy to build on floodplains. I want to drill it in to everyone who is listening that the NPPF makes it very clear that that is a bad idea and that it should not happen.

Nigel Evans: I thank the Secretary of State for making that statement on such an important issue.

Points of Order

William Bain: On a point of order, Mr Deputy Speaker. Have you received any intimation from the Secretary of State for Work and Pensions or the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey), who has responsibility for disabled people, that they intend to deliver a statement to this House, either this evening or tomorrow, about the outrageous decision to close the Remploy factory in Springburn in my constituency, with the loss of 46 jobs, which was announced today? Do my constituents not deserve clear answers on what went wrong in the tendering process, why they have been so badly let down at this final stage, and how the Government will strain every sinew to get them replacement jobs?

Nigel Evans: Thank you for that point of order. I have received no information that any Minister intends to make a statement on that issue or any other issue today. Should that alter, the House will be informed in the usual way. As far as tomorrow is concerned, we will have to wait until tomorrow.

Diana Johnson: On a point of order, Mr Deputy Speaker. During oral questions in July 2010, I was told by the then Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Meriden (Mrs Spelman), that she was proud that she had found a way forward with the insurance industry on flood insurance. Today, we see that the Government have done no such thing. My constituents were relying on the word of the Secretary of State in the House of Commons and they now feel very let down. What can be done to correct the record?

Nigel Evans: That sounds to me more like a matter of debate than a point of order. The hon. Lady is a senior Member of the House and will know the tools that are available to her to pursue the matter.

John Robertson: On a point of order, Mr Deputy Speaker. I am speaking on behalf of the shadow Home Office team, in my role as shadow Parliamentary Private Secretary, with regard to the answering of named day questions tabled by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper). Questions 126091, 126092, 126093 and 126106 were tabled at the end of October for answer within two working days. They have still not been answered. Will you, with the help of Mr Speaker, help to get those questions answered so that Her Majesty’s Opposition are able to fulfil their duty to scrutinise the Government?

Nigel Evans: It is unusual for one Member to raise a point of order on behalf of another and I do not wish to encourage the practice. There is nothing to inhibit Front-Bench Members from the official Opposition in making their own points of order. That said, questions for written answer on a named day should receive some kind of answer, preferably a substantive one, on the day that is named, and a full answer should be provided in a reasonable time. If the right hon. Member for Normanton,
	Pontefract and Castleford (Yvette Cooper) cannot get satisfaction by raising the matter with the Minister concerned, she should inform the Procedure Committee of her problems.

Grahame Morris: On a point of order, Mr Deputy Speaker. This is the first opportunity that I have had to apologise to you and the House for any suggestion or perception that I breached parliamentary procedures by failing to make reference to my entry in the Register of Members’ Financial Interests, which states that I participated in a study tour of Venezuela, before I asked a topical question of the Foreign Secretary during Foreign Office questions on 4 September. I have made no secret of my visit. In fact, I have written to newspapers and blogged about it extensively. If I breached procedures, it was unintentional and I place on the record my apology.

Nigel Evans: The House will have noted what the hon. Gentleman has said. It is worth putting it on the record, however, that the resolution of the House of 12 June 1975, which was last amended on 9 February 2009, excluded supplementary oral questions from the requirement for declaration. It appears to me that a topical question is a supplementary question. It is up to Members to judge whether an interest is of a nature to justify a declaration at such times, but the House’s rules do not require it. The hon. Gentleman has now made such a declaration.

Small Charitable Donations Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1
	 — 
	Annual Report

‘(1) The Treasury must, within 24 months of the Act coming into force and annually thereafter, prepare a report on the Gift Aid Small Donations Scheme (GASDS) and lay it before the House of Commons.
	(2) Each such report must provide details of—
	(a) the number of charities benefiting from the GASDS in—
	(i) England;
	(ii) Wales;
	(iii) Scotland;
	(iv) Northern Ireland;
	(b) the number of charities benefiting from the GASDS that are—
	(i) registered with the Charity Commission, Office of the Scottish Charity Regulator, or the Charity Commission for Northern Ireland, as appropriate;
	(ii) exempt charities;
	(iii) excepted charities;
	(c) total expenditure on the GASDS; and
	(d) the level of identified fraudulent claims in the GASDS.’.—(Cathy Jamieson.)
	Brought up, and read the First time.

Cathy Jamieson: I beg to move, That the clause be read a Second time.

Nigel Evans: With this it will be convenient to discuss the following:
	New clause 2—Post-legislative review—
	‘The Government shall, within 24 months of this Act coming into force, undertake a review of the operation and administration of the Gift Aid Small Donations Scheme and lay a report of the review before the House of Commons.’.
	New clause 3—Complementary gift aid for small donations to small charities—
	‘(1) Smaller charities, community amateur sports clubs or recently established charities, which do not meet the eligibility criteria in section (1) shall be eligible to apply to HM Revenue and Customs for complementary gift aid for small donations.
	(2) “Small donations” for the purposes of complementary gift aid shall be as provided for in section 3 and the Schedule.
	(3) That maximum donations limit for complementary gift aid shall be £5,000.
	(4) The “connected charities” conditions in sections 4 and 5 shall also apply for charities making claims for complementary gift aid for small donations.
	(5)
	(a) HM Revenue and Customs may stipulate the supporting verification it may require from relevant agencies or authorities or designated persons in respect of any claims for complementary gift aid for small donations to small charities;
	(b) such agencies, authorities or designated persons may include charity commissions, local government officers, police or police and crime commissioners, members of relevant professional bodies or others designated by devolved administrations in agreement with HM Revenue and Customs for these purposes.
	(6) This section shall come into force on 6 April 2014.’.
	This would provide for a separate scheme of supporting payments from HM Revenue and Customs, in the spirit of gift aid, to smaller or newer charities including those formed in response to a particular event.
	Amendment 9,in clause 1, page2,line7, leave out subsection (6) and insert—
	‘(6) The “specified amount” for a charity for a tax year is (subject to section 2(1))—
	(a) £5,000 for a charity eligible for the full specified amount; or
	(b) £2,000 for a charity eligible for the reduced specified amount.’.
	This amendment is consequential on amendment 8.
	Amendment 8,in clause 2, page2,line11, leave out subsection (1) and insert—
	‘(1) A charity is an eligible charity for a tax year if—
	(a) it has made a successful gift aid exemption claim in at least three of the previous seven years. In such cases, a charity will be eligible for the full specified amount; or
	(b) it has made successful gift aid exemption claim in the previous year. In such cases, a charity will be eligible for the reduced specified amount.
	This amendment introduces a probationary period for charities that do not have the claims history required in subsection (1)(a) of this clause. It allows them to benefit from a reduced specified amount until a claims history has been established. This also removes the requirement for a start-up period.
	Government amendment 24.
	Amendment 32,page2,line14, at end insert ‘or
	(c) the charity is a “small charity”;
	(d) the charity has been established for a specific event or project which has concluded.’.
	This amendment extends the meaning of eligible charity to small charities and those established for specific events or projects.
	Government amendments 25 and 26.
	Amendment 10, page2,line26, leave out paragraph (a).
	This amendment is consequential on amendment 8.
	Government amendment 27.
	Amendment 11,in clause 4, page3,line9, leave out paragraph (b) and insert—
	‘(b) are eligible for the same rate of specified amount (subject to section 2(1)) for the tax year.’.
	This amendment is consequential on amendment 8.
	Amendment 12, page3,line15, leave out paragraph (a) and insert—
	‘(a) the specified amount (subject to section 2(1)), divided by’.
	This amendment is consequential on amendment 8.
	Amendment 13,in clause 6, page4,line41, leave out paragraph (b) and insert—
	‘(b) if less, the specified amount (subject to section 2(1))’.
	This amendment is consequential on amendment 8.
	Amendment 14,page4,line45, leave out paragraph (b) and insert—
	‘(b) if less, the specified amount (subject to section 2(1))’.
	This amendment is consequential on amendment 8.
	Government amendments 28 and 29.
	Amendment 15,in clause 9, page6,line20, leave out paragraph (a) and insert—
	‘(a) two or more charities (“connected eligible charities”) are connected with one another in a tax year and are charities eligible for the same rate of the specified amount (subject to section 2(1)) for the tax year, and’.
	This amendment is consequential on amendment 8.
	Amendment 16, page6,line37, leave out paragraph (b) and insert—
	‘(b) if less, the specified amount (subject to section 2(1))’.
	This amendment is consequential on amendment 8.
	Amendment 21,page7,line10, at end add—
	‘(8) The Treasury must, within 24 months of this Act coming into force, prepare a report assessing the impact of—
	(a) the connected charities provisions; and
	(b) the community buildings provisions
	on the ability of charities to benefit from the Gift Aid Small Donations Scheme and lay it before the House of Commons.’.
	Government amendment 31.
	Amendment 33,in clause 18, page12,line20, at end insert—
	‘“small charity” means a charity whose gross income for a tax year is no more than £25,000.’.
	This amendment defines a small charity as one whose gross income for a tax year is no more than £25,000. This figure is consistent with that given for lower-income charities in the Charities Act 2011 and the Office of the Scottish Charity Regulator’s Routine Monitoring Policy.

Cathy Jamieson: I look forward to further interesting debates on the proposals—we had interesting debates both on Second Reading and in Committee. This large group includes significant proposals, although a number are consequential on acceptance of the main amendments.
	We discussed a number of the significant proposals on Second Reading and in Committee. They follow a pattern. I thank the Minister—it might be one of the few times I do so—for listening to some, but not all, of the concerns raised in Committee. At the time, it was not always clear that he would introduce amendments or deal with other things, but I thank him for listening. Crucially for the charities, if not for the Opposition, he has responded to points that the charitable sector raised with us.
	Today we have once again heard concerns from the wider charity sector about the reported deficit of more than £300 million in 2011, which it has brought to public attention. That shows the current difficulty of getting donations and income into charities while at the same time they are facing increased burdens on the services they provide—not that the sector sees its services as burdens. Hopefully, more charities will benefit from the Bill now than would have benefited from it when we debated it in pre-legislative scrutiny, on Second Reading and in Committee.
	We had long debates in Committee on some clauses and amendments. I am sure the House will be relieved to know that I have no wish to repeat them verbatim—that would be unhelpful—but it is worth noting that the same issues came up in Committee time and again, which suggested that further work needed to be done to amend the Bill. We also need to continue to scrutinise what the Bill will do in the light of subsequent amendments.
	There is an extensive list of proposals in the group, and I want to refer to a number of them. It would be wise of me to put on record that we have tabled new clauses 1 and 2 because they would deal with a number of concerns that the Opposition and the charity sector have raised throughout the Bill’s progress. Perhaps the Government have acknowledged—in their amendments in Committee and on Report—that the original Bill was not drafted as tightly as it might have been, or in a way that ensured as much fairness and equity as possible.
	It is therefore right and proper that we return to the issue of formally reviewing the Bill after a two-year period. The Minister said many times in Committee that he was willing to look again at the measures and acknowledged that he wished to amend the Bill—we will discuss that later. However, when the Chancellor first announced the scheme, he said he wanted it to deliver
	“gift aid on the contents of the collecting tin and the street bucket”—[Official Report, 23 March 2011; Vol. 525, c. 962.]
	He also pledged that the reforms would be “bureaucracy-lite”. That theme has run throughout our discussions.
	The Bill will doubtless benefit a number of charities and community amateur sports clubs, which is welcome, but the Government need to reassure charities that they are committed to making the Bill the best it can be. Given that many of the concerns that have been outlined will not result in changes to the Bill before Royal Assent, we can know how well the scheme is performing in practice only if there is a formal review. In any event, it would be good practice to review legislation after a period of its operation. That theme ran through a number of proposals that the Opposition tabled in Committee.
	The Minister will note that we are trying in new clauses 1 and 2 to add extra detail to the report that we originally asked for in Committee. Let me say a few words about why a detailed report is so important. I do not want to go through all the arguments again, but we heard in Committee that anywhere between a third and a fifth of charities would benefit as a result of both the strict eligibility criteria and the community buildings and connected charities provisions, which we have debated extensively at various stages. The corollary to that is that a significant number of charities will be unable to benefit. The scheme could therefore be divisive, favouring some types of charities over others. That theme also ran through the debate.
	Attempting to solve one problem often produced unintended consequences and difficulties—I am thinking of our debates on churches, and on large versus small charities—and that is why we ask in the new clauses for a breakdown and a review that gives more detail. That is important. New clause 1 mentions registered charities, exempt and excepted charities, and charities in different regions. That would mean that we can fully understand the impact of the scheme once it is in operation and redress any inequalities as soon as possible.
	We spoke extensively in Committee about the complexity of the Bill. As we heard, it is estimated that 160 pages of guidance on Her Majesty’s Revenue and Customs website will be needed to explain it. There are 80 pages on registering for gift aid, so perhaps we can agree that the Bill is more complex than we would like it to be. Not just the Opposition and the charity sector understood that and raised such particulars; the Minister, in the sixth sitting of the Bill Committee on 23 October, admitted that the rules were complex in response to one of my hon. Friends. He said:
	“I readily admit that this part of the Bill is complex and that we do not know exactly how it will work until it comes into practice.”––[Official Report, Small Charitable Donations Public Bill Committee, 23 October 2012; c. 207.]
	In another Committee sitting, he said that
	“the very nature of trying to capture issues such as connectivity—whether it is here where we are dealing with charity, or in other laws where we are dealing with trusts—is complex.”
	He has also said that:
	“Clearly HMRC is like any organisation; mistakes can always be found.”––[Official Report, Small Charitable Donations Public Bill Committee, 25 October 2012; c. 223-5.]
	I make those points simply to reinforce the rationale for building into the process a formal review, because of the nature and complexity of the Bill and the amount of guidance that will be required. At one point in Committee, I said that if a charity had £1 for every word of guidance needed, there would be a fairly significant donation to good causes. It is important that the Bill requires a formal review, so that we can understand the provisions and ensure that we keep tabs on the costs of the scheme.
	In the Minister’s deliberations in Committee, he often spoke of having to be a good guardian of the public purse. I would have thought that it would therefore be only right and proper for the Government to commit formally to reviewing the costs of the scheme after an appropriate period—reviewing the spending, because the Minister said that as many charities as were eligible would be able to take part in the scheme, and to ensure that the money was equitably distributed, identifying any problems in the regions of the different nations that make up the UK.
	There are a number of concerns about the data on which we begin the process. The Minister was good enough to write to the Opposition to answer a number of the questions we raised in advance of the debate. He mentions in his letter amending the matching rate; amending the eligibility period to two years; introducing a power to amend the eligibility criteria in future; and changing the powers in some of the clauses. He goes on to give some information about organisations that can claim gift aid but are not covered by Charity Commission data. He gives figures, and that is helpful, although—as is often the case in these scenarios—the answers to questions immediately prompt a series of other questions. Some of the responses that we have subsequently had from the charity sector suggest confusion in some areas, and I hope that the Minister will be able to clear that up. He could also help us to establish that baseline from which the success or otherwise of the scheme could be judged in the future.
	For example, in the Minister’s letter he suggests that 60% of the organisations claiming gift aid in 2009-10 were registered charities. I am not entirely sure what that 60% represents. Was that 60% of the 68,357 charities to which gift aid repayments were made in 2009-10? That figure comes from HMRC’s own release. If that is the case, it would suggest that just over 41,000 registered charities were claiming gift aid in that year, which of course means that some 40% of the total were claiming other types. It would be helpful if the Minister could clarify the point and reassure us.
	The Minister also indicates in his letter that HMRC does not hold data on the number of charities making gift aid claims. That is a bit confusing because HMRC has been able to provide some statistics and figures, so it seems that it does hold some underlying data, if perhaps not all of the data that we have sought. It would be helpful to have some clarity on that point. Does HMRC not hold up-to-date data on the number of registered charities or have we somehow misunderstood the Minister’s
	letter? If so, the charitable sector is saying that it too could have misunderstood, and that does not bode well for good communications.
	It would be helpful if we were able to ensure that we have such provision in the Bill. As we know, Ministers come and Ministers go. This Minister is relatively new in post and it is good to see that he is still here to reap the benefits and take the plaudits when the Bill passes—as it no doubt will—but another Minister may come along in due course who may not have paid quite so much attention to the Bill and perhaps has not fully appreciated the amount of attention to detail from this Minister and the commitments that he made in Committee. For that reason, it would be helpful to have something on the face of the Bill, as outlined in new clauses 1 and 2.
	I fully appreciate the fact that the Minister has tabled some amendments, to which he will speak in due course. Depending on what he has to say, those amendments may make some of the amendments that we have tabled superfluous or redundant, but it is important to place on record our reasons for tabling them.
	A whole series of consequential amendments flow from amendments 8 and 9, which provide for a sort of probationary period for charities before they qualify. The Minister will no doubt already be thinking that his amendments on the claims history would give more benefits to some charities than our amendments. That may well be the case, but the counter-argument would be that under our amendments charities would be able to benefit sooner.
	The Minister will also remember that in Committee we tabled several amendments pushing him to reconsider various aspects of clause 2. We did that because the sector essentially felt that the three-year history of successful gift aid claims and the requirement that charities must have been in existence for at least three complete tax years before they could benefit from the scheme were overly onerous and out of proportion to any risk of fraud. The Government have tabled some amendments in this area and I take that as a sign that they have listened to our concerns and taken steps in the right direction.

Martin Horwood: Is it the hon. Lady’s understanding that Government amendment 31, which seems to allow some flexibility for subsequent changes of the rules, nevertheless—according to the explanatory statement in the notes—insists that previous gift aid claims have to have been made, which of course may well preclude large numbers of the very small charities that the Minister presumably wants to help? Therefore it will still work against the interests of some of the smallest charities, and I am personally very disappointed that an amendment with more flexibility has not been tabled.

Cathy Jamieson: I thank the hon. Gentleman for making that powerful point, and we will come back to it later when we discuss other amendments. Whatever happens, I would hope that the Minister sees the point that the hon. Gentleman raises as a reason for ensuring that, at the very least, a review clause is built into the Bill. We would want to know whether a continuing number of small charities continued to be unable to access the scheme and gain benefits. Indeed, at some
	stage we will discuss the whole question of charities set up in response to particular circumstances—for very worthy causes—that may not be able to benefit at all from the scheme because the need will have been met and they will have moved on by the point at which they become eligible even to apply.
	The idea behind the scheme is to boost the income of small groups that rely on bucket donations, and the hon. Gentleman has pointed out very succinctly that there are many such groups which simply will not be able to take advantage of the scheme, including those which do not have the resources to apply for gift aid or are just starting out. Our amendments seek to help those charities by removing the requirement for the start-up period and instead introducing a qualification period. We had some debate on this in Committee and our amendment would allow charities—new or established —without that claims history of gift aid to claim for a reduced amount of £2,000 after one year of claims history and then to claim for the full £5,000 once they had built up a three-year history.
	As we have already heard, there are concerns that the Government’s requirements will be a significant barrier to participation for many charities that have not previously registered. They will also exclude organisations to which even an additional £500 would make a huge difference in income. Instead, it would tend to favour the bigger, more established organisations that may have the finance and fundraising departments to make gift aid claims. Many of the smaller, ineligible charities will already have been registered with the official regulator for three years. They will have had to submit accounts and pass the fit and proper person test, which is pretty robust. For some charities, their major fundraising may be from non-eligible sources, such as donations from trusts, events and charity shops, and they will not have been able to claim gift aid for the required three years even if they have significant income from small donations through collections which would be eligible for this scheme. For trustworthy established charities to be forced to wait a number of years before making claims reduces the incentives for registering.
	The sector gave us a couple of examples. I will not go into all the detail, but one example was Wansbeck CVS, which has just set up a small grants fund in memory of a community development worker. It is designed to give small grants to local charities, but it had not been previously registered for gift aid. Under the current proposals, only donations received years after it registers for gift aid will be eligible. That is one of the examples of possible problems we were given.
	We suggested that introducing a qualification period would go some way towards allowing charities that stand to benefit most from the scheme to be able to claim a reduced amount of £2,000 after only one year. That would at least allow them to cover their administration costs for claiming, while giving them an incentive to fundraise further and claim for standard gift aid. We tabled the amendments to try to provide a way forward that would balance the risk of fraud, identified by the Minister in Committee, with the ability to give a boost to the scheme for charities that need all the help they can get in tough times.
	Amendments 17, 18, 19 and 20 relate to community buildings, on which points have been raised consistently during this process. The Minister will recall that in
	Committee we tabled a number of amendments to try to change the community buildings provisions substantially. We believe that they are seriously flawed and unfair to charities that would find themselves disadvantaged and unable to benefit. Many in the sector were disappointed that the Government did not give any ground, and I am disappointed that they have not used the opportunity of the Report stage to reconsider, as the Minister has done on other matters.
	I suspect that the Minister will not move on these provisions, but if we cannot have a wholesale change to the Bill at this stage, I hope that the Government will at least be persuaded to look again at one particular aspect of the community buildings provisions. Clause 6(3) defines the community building amount as
	“the sum of the small donations that are made to the charity in the community building in the tax year by group members while it is running charitable activities in the building”.
	Even before Second Reading, that point was raised consistently as one that had the potential to cause difficulty for some organisations. In an attempt to solve the problem in relation to churches—the Minister rightly and understandably wanted to find a solution—we have a scenario in which it will be very difficult for other charities to take advantage of this part of the scheme, and that will potentially cause more problems than it solves. As we have heard previously—it is worth reiterating the point—clause 6(6) goes on to define a group member as:
	“a member of the group of people with whom the charity is carrying out the activity”.
	We heard a number of examples relating to that point, most vividly from my hon. Friend the Member for Leeds East (Mr Mudie), who spoke about a potential scenario with regard to a charitable group involving Alzheimer’s patients and asked whether it would only be those within the group who were able to make donations.
	We have an issue with the principle here. We are concerned that for a great number of charities the beneficiary and the donor groups are likely to be two separate constituencies of people, and we do not want that to become a discriminating factor in whether charities can access the scheme. Indeed, it seems to us to be the exception rather than the rule that funds would be raised during the course of charitable activities by those benefitting from them. If we set aside churches and the collection plate, there are many scenarios where it would be entirely inappropriate for the bucket to be passed around the 10 or more members sitting there while the charitable activity was being undertaken. For example, during counselling work or work that provides activities for young people, or in which young people are involved, that would simply not be sensible.
	The nature of fundraising is highly dependent on the type of activity and an organisation’s beneficiary group. The requirement in question would disadvantage the types of charities in respect of which it would not be appropriate or possible to raise funds in this way. Notwithstanding the debates we had in Committee, we still have concerns about whether such provision will go against the benefit principle of gift aid where gift aid is not available and where a donor receives personal benefit. In Committee, the Minister was at pains to say that that was not the case. However, we still have some concerns
	about the wording in the Bill, so this is another area where it would be important to have some review and some consideration about whether the Bill will work as it is intended to.
	I will not repeat what was said in all the debates, but in Committee we heard that it would be difficult for such charities as Victim Support and the Alzheimer’s Society to benefit from these schemes, which is why we have tabled these amendments. Once again, the charitable sector—most recently the Charity Finance Group, the National Council for Voluntary Organisations, the Institute of Fundraising and the Charities Aid Foundation—has stressed that point. Such organisations are concerned that the only donations that will count will be those made within a community building. Although some changes have been made, there are concerns about whom the provision would actually apply to, because the people participating, not including staff or volunteers, might be vulnerable people.
	I appreciate that I am speaking at some length, but we have a number of important and significant amendments. In my notes, my shorthand for amendment 21 is that it is a review amendment. It may seem that all Opposition Members talk about is review, review, review, but I hope that I have begun to lay out exactly why we feel that the provision to review is important. Although we have tabled an amendment that focuses on the part of the community building provisions I have just been talking about, however, I do not want the Minister to think that we have given up on all the concerns we had on other aspects of the community building provisions.
	From our debates in Committee, the Minister will recall our concerns about clause 7. The clause states that charities must run their charitable activities “in a community building” for them to be eligible for top-up payments. We had a wide-ranging discussion about whether charitable activities could be run from community buildings, whether they had to be in community buildings and the relationship between the organisation setting up and those participating. The Bromsgrove scouts became a touchstone—how the provision would effect the Bromsgrove scouts became the main discussion point. We also heard from charities such as the Royal National lifeboat Institution, which runs its charitable activities—this has been mentioned on a number of occasions—at sea, and a large number of charities that run their activities in the community, such as Victim Support and the Alzheimer’s Society. They often hold their counselling sessions or work in homes or in other community spaces, and we heard concerns that those organisations should not lose out.
	We also raised concerns in Committee about clause 8, which specifically excludes from the scheme properties used for residential purposes, limiting the ability of care homes and hospices to access it. In Committee, the Minister stated that patients in hospices would still be registered at their homes, as he understood it, for the purposes of the Bill. People go to a hospice at a sad stage in their life, but to all intents and purposes their home is elsewhere and therefore should not count as a residence. He gave us some assurances on the care home sector, but there are still some concerns.
	I gave the example of organisations providing residential provision for young people possibly for 52 weeks of the year. To all intents and purposes, such provision might form young people’s home for a time. There remain
	concerns in that area. The sector is also concerned that this approach might be a bit short-sighted, failing to take into account not only the ageing population and possible changes in hospices’ and care homes’ functions but the possibility, notwithstanding the best will of the Minister, that the legislation might exclude people from benefiting.
	In addition to the community buildings provisions, clauses 4 and 5 aim to prevent charities from fragmenting so as to be eligible for more money under the scheme. Clause 5 defines the meaning of “connected charities” and stipulates that they are deemed to be “connected” if
	“at least half of the trustees of one of the charities are…trustees of the other charity,…persons who are connected with persons who are trustees of the other charity, or…a combination of both.”
	Once again, the Committee discussed at length how in small communities volunteers often sit on the boards of several local charities. The concern is that, although their work might not be connected, the charities could be deemed to be connected for the purposes of the Bill and, therefore, not eligible for the full top-up payments. Even more problematic was the possibility of charities being deemed connected if a man sits on one board, and his wife or sister sits on another.
	Clause 5(7) states that
	“a charity is not to be regarded as connected with another charity at a time for the purposes of subsection (1) unless, at that time, the purposes and activities of the charities are the same or substantially similar.”
	Our concern is that, in trying to create fairness in one area, the Government might—in the community buildings and connected charities clauses—have created areas of inequity between the different charitable causes. The reason for amendment 21, on providing for a review of the community buildings provisions, is to take account of these concerns. They have been consistently raised and have not gone away, notwithstanding the Minister’s best efforts in tabling further amendments.
	Government amendment 28, on the definition of running charitable activities in a community building, shifts from HMRC to the Treasury the power to change the number of people who must be present during a charitable activity. Likewise, Government amendment 29 shifts from HMRC to the Treasury the power to decide whether a building qualifies as a community building. I will be interested to hear why the Minister has tabled those amendments at this stage. He will recall our extensive discussions on this subject in Committee. We probably spent longer on whether HMRC was the correct agency of government to deal with the Bill’s operation than on any other issue. I would be interested, therefore, to hear why he thinks this is important now. Are they technical amendments or does he accept that it would not be right for HMRC to deal with certain of these issues? It would be helpful if he could enlighten us.
	Amendments 32 and 33 relate to small charities. I have already touched on the concerns regarding small charities and what I described as pop-up charities—those that deal with a particular need which might not intend to be around for many years and which quickly move to collect substantial amounts of money. The hon. Member for Banff and Buchan (Dr Whiteford) will speak to her amendments in due course, and will want to say more about her rationale then. Whether the Minister accepts them or not, however, they touch on another reason
	why the review clauses are important: they would enable us to review the scheme’s operation, taking into consideration organisations that might be able to benefit but which have been excluded because of how the scheme has been constructed and because of the sheer complexity of the application process for gift aid—there are 80 pages on gift aid and 160 pages of guidance—that organisations must go through to be absolutely certain that they are eligible.
	I look forward to hearing the Minister’s response. I stress again that we want the Bill to pass. The reason for the amendments and our consistency on where we think the Bill still requires amendment even at this late stage is that we are relying on the charitable sector to tell us what works and what might be a problem. As I said at the outset, we recognise that the Minister has listened and—to be fair—in some instances introduced further amendments, but I press the case again. He has been good enough to recognise some of the areas in the Bill that need improvement, and he would gain favour with the whole House and the charitable sector if he could recognise the remaining areas that could be further improved and, even at this late stage, accept some of the amendments. That would make the Bill even better. The review clauses would allow us to revisit areas that I suspect will cause charities the most difficulty. We want people to benefit, not lose out, from these measures, so I hope that he will accept at least some of our amendments.

Susan Elan Jones: It is a privilege to speak in this debate. As hon. Members present at the time will know, we had some good, positive and, indeed, consensual discussions in Committee. Labour Members are keen to see the Bill passed, because we recognise that much of it is an extension of what previous Labour Governments did. That is why we want to get it 100% right. Things such as the compact for the voluntary sector and the immense growth and development of gift aid happened on Labour’s watch, and we are keen to see that trend continue in the Bill.
	Certain groups will rightly be especially pleased with the Bill. It is fair to say that the dioceses, Churches and faith groups welcome the Bill, as do we, and it is right that we support those groups and the tremendous work they do in communities across the country. A range of other charitable groups will also benefit.
	I am pleased with certain changes in the matching principle: I am not a betting person, but, on this occasion, 10:1 is clearly better than 2:1. Nevertheless, we are asking the Minister to listen to the voice of the national charities’ voluntary organisation, the Institute of Fundraising, as well as the Charities Aid Foundation and other groups, which are saying, “If you are prepared to improve the Bill in certain ways, as you have been, please think again about having the link with gift aid, if we really want charities, including those not currently claiming gift aid, to benefit.” I urge the Minister to have at least a little think about that. He and the Government have gone some way towards accepting some of the changes that those groups wanted. Let us get it 100% right. I urge him to consider those other changes too.
	I want to look at the issue of reviewing the legislation, about which my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) spoke with great eloquence. We know that many things in the Bill will work, but if the development of community and voluntary sector
	groups over the last 10 to 20 years is anything to go by, we know too that fundraising has changed dramatically. What worked yesterday will not work today, and what will work tomorrow will probably not have worked today. It will change over time. That is why we ask the Minister to consider having a review.
	Mention has been made about the way donations are made, and I am confident that more mention will be made of it. What interests me is that if one made a £10 cash donation, there could be benefits under this Bill, but not if the same donation were made on a mobile phone or with a bank card. As someone from generation X—I have not actually checked, but I think I am—that strikes me as a little odd, but let us think about the new donors we want to cultivate in generation Y, as I think it is called. If we are to build a new philanthropic culture that encourages younger and newer donors, we must at least be open on that point. I urge the Minister to look carefully at that provision, which I know has already been mentioned by my hon. Friend the Member for Kilmarnock and Loudoun, and I know it will be mentioned later. I urge him to reconsider and to support the concept of an ongoing review so that future charities Ministers and other Ministers can look at this legislation and say, “Let us make it work for today’s generation.”

Eilidh Whiteford: Let me begin by declaring an interest. Until relatively recently I was a trustee of two charities registered in Scotland and I remain a trustee of the Parliament Choir, which also has charitable status.
	I acknowledge the progress made on the Bill in Committee and the steps people have made across the House to come up with constructive solutions to the acknowledged weaknesses of the legislation in its original form. I hope the Minister will take on board some of this evening’s amendments, not least the two in my name in this group—amendment 32 and the consequential amendment 33. My amendments are designed to provide a mechanism to allow smaller and project-specific charities to benefit from gift aid top-up payments without having to have made a successful gift aid exemption claim in three of the last seven years, or two of the last four—I am conscious that the Government have tabled an amendment to improve that part of the legislation. For the sake of clarity and simplicity, I propose that a “small charity” be defined as one with a gross annual income of £25,000 or less. As with other amendments in the group, the aim is to bring more small charities within the ambit of the legislation, which is a shared aim across the House this evening.
	The reason I urge the Government to look closely at my amendments is simply that smaller charities often do not benefit from gift aid, and in some cases do not even register for it. The very charities that this Bill is intended to benefit are among those that are least likely to be registered for gift aid or to have claimed it regularly even when they are. As the proposals stand, an eligible charity has to have been registered with Her Majesty’s Revenue and Customs for a minimum of three years, made a gift aid claim in three of the past seven years, and not had a penalty imposed in making a gift aid claim. We know that around 100,000 organisations are registered with HMRC for gift aid, but only 65,000 claim
	each year, which is a significant gap. They include not just general charities, but excepted charities, such as churches, exempt charities, such as museums and foundation schools, and community amateur sports clubs. At the moment, many small charities are not registered with HMRC and do not have a three-year track record of making gift aid claims, which particularly affects charities run solely by volunteers—those that do not have professional staff, including fundraisers, or the time and resources that other, more professionalised charities do. Such charities are often involved in the very projects that attract the largest active community involvement and support, which in my view are exactly the sorts of activities that we should use the Bill to incentivise in our civil society.
	Notwithstanding the proposal to decrease the three-year registration period, any time limit will mean that charities engaged in short-term or fixed-term fundraising will have little incentive to register for gift aid with a view to taking part in the new scheme. Whether it is fundraising to replace the windows in a listed community building or raising funds for special equipment for a disabled youngster, any one-off projects raising relatively modest sums of money over a short period will find it difficult and unduly cumbersome to benefit from the scheme. Even the Government amendments this evening will not meet the needs of short-term appeals. Indeed, charities that receive only cash donations and do not fundraise in other ways will have no opportunity to claim gift aid even if they would like to.
	Although I fully accept that any definition of a “small charity” will be to some extent arbitrary, I want to explain to the House why I have suggested £25,000 as an income level and assure Members that I did not just pluck that number out of the air. It is already the threshold that the Office of the Scottish Charity Regulator uses for the treatment of smaller charities in reporting and monitoring. There is a recognition that reporting and monitoring need to be commensurate with the size of an organisation, and the burden of compliance needs to be proportionate too. Charities with an income below £25,000 per annum have to submit an annual return, but do not have to submit the supplementary monitoring returns and annual accounts required by larger organisations.
	Similarly, in England and Wales, the Charities Act 2011 contains numerous mentions of “lower-income charities”, which are for the most part—but not exclusively—defined as having a gross income of £25,000 or lower. That definition is used to determine the requirements for auditing and annual reporting—for instance, in part 8 of the 2011 Act, which deals with charity accounts, reports and returns. As the registration of charities has not commenced in Northern Ireland, the situation is somewhat different there, but there are nevertheless distinctions drawn between very large and smaller charitable organisations. As the greatest risk that needs to be managed in this Bill is the potential for fraud, defining a “small charity” in a way that is consistent with the accountability practices and processes already in use by charity regulators would be a useful step forward.
	Before I conclude, I want to pick up a point that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) made about connected charities. As someone who represents a rural constituency, I absolutely concur
	with what was said earlier. In rural communities, the trustees of the local village hall will often be drawn from the trustees of the various groups that use it. There is every likelihood that the same people or their spouses will appear on the Kirk session, and they might well be on the school-parent council too. Therefore, the cohesiveness of those small communities—where some people are extremely active in a range of activities and where a lot of entertainment is very much home grown and home run—will potentially be affected. I urge the Minister to look carefully at how the Bill’s important safeguards will play out in remote rural communities, where such cohesiveness is still very much part of the fabric of daily life.
	To put this debate in context, 60% of all charities active in Scotland—around 14,000—have a gross annual income of less than £25,000, with almost 9,000 having an income of under £5,000 a year, more than 2,000 whose income is between £5,000 and £10,000, and just over 3,000 with a gross annual income of between £10,000 and £25,000. Those smaller charities represent a disproportionate number of charitable organisations, with 47% of all charities in Scotland—almost half—having a gross income of less than £10,000 a year. Published information from the Charity Commission shows a similar picture in England. In June 2010, there were 73,000 registered charities in England and Wales with an income of less than £10,000, representing 45% of the sector. Given those proportions, it is incumbent on all of us to look at how we can strengthen the Bill for the smallest charities and ensure that they are able to benefit from the legislation, as was originally intended. According to the National Audit Office, 67% of the charities across the UK generate only 1.4% of charitable income. Let us bear it in mind that the Bill is supposed to support those smaller charities. I urge the Government to look carefully at the amendments tabled by Members on the Opposition Benches, including amendment 32.

Gemma Doyle: Charities are facing challenging circumstances, with falling financial support from the Government and falling regular donations as a result of the squeeze on people’s spending. This is a tough environment for any charity to work in. Furthermore, the reliance on the charitable and voluntary sector is increasing, as we are seeing from the number of food banks that are springing up and the greater reliance on homelessness services.
	We owe it to charities to help them out when we can, and I must admit that the Chancellor’s announcement of these proposals was one of the few parts of the Budget that I welcomed. Now that we have had a chance to look at the details, however, we see that there are still some outstanding issues. We will of course support the Bill on Third Reading, but I still have concerns about accessibility for many of the charities that could benefit most from it.
	Offering charities the chance to take advantage of a gift aid top-up is of course welcome. My constituency is facing a number of serious challenges, but we are fortunate to have a thriving charitable and voluntary sector that does much good work throughout the area. I am thinking of the small charities run by a handful of local volunteers, such Home from Home in Dumbarton, and the Clydebank Asbestos Group, which has a very wide reach but relies on a small team of dedicated volunteers, as well as the
	slightly larger ones with some staff, such as Y Sort-It in Clydebank. They all contribute so much, working alongside the services offered by the local authorities to help with a range of issues.
	As I am sure other Members will recognise, it is often many of the smaller charities which are getting by on tiny incomes that help so much with the provision of local services. Many of them do not have steady income streams or the time and manpower—or, often, the womanpower—to administer complex donation rules. They rely on simple methods of fundraising, such as bring-and-buy sales and collecting donations in buckets on the street. Those small activities all add up.
	I am sure that, like me, many of those smaller charities will be pleased with the effect that the proposals could have on their incomes. They remain concerned, however, about the restrictions that could make them ineligible. The Government need to ensure that the rules will work for charities and not against them. As my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) has comprehensively set out, we need the Bill to help charities out, not to add to the burden of bureaucracy.
	Bureaucracy can be a headache for small charities. Compliance with the rules is essential—they are there for a reason—but they can pose real difficulties, particularly for the smaller charities. A Treasury spokesperson said the Government’s proposals were intended to reduce the administrative burden on charities, but I am not sure that that is what they will do. It is possible that the bigger charities, not the smaller ones, will benefit.
	The Government’s amendments are helpful; they are heading in the right direction. The original proposals could have resulted in the smallest charities losing out the most, because placing so many conditions on the new top-up would have made it difficult for those charities to take advantage of the scheme. I am pleased that the Government seem to have recognised the problem with the three-year criterion, and that they are moving towards a two-year period instead. That will widen the benefits to include more charities. However, the proposals will still favour the larger charities that have a history of gift aid claims over the smaller ones that rely on bucket donations.
	Similarly, the Government’s amendments do not properly reflect the needs of newly established charities, which will naturally not have any history of gift aid claims. The hon. Member for Banff and Buchan (Dr Whiteford) said that her amendment would acknowledge the fact that, although many charities are proactive in their work, there are those that react to events. A charity might be set up to react to a natural disaster, for example; another might be set up in memory of a loved one. Newly established charities often receive a significant proportion of their donations at the very beginning, and their donations might subsequently tail off. Under the current proposals, they would not be able to claim top-up payments related to those important initial donations.
	Our amendments are intended to help those small and new charities by removing the lengthy start-up period and replacing it with a probationary period. That would provide a real benefit. It would allow all charities without a claims history, whether new or established, to benefit from the top-up scheme while keeping the protections in place. It is important to
	have protections against fraud, but I believe that our proposed probationary period would be sufficient in that regard. I therefore encourage Members to support our amendments.
	We need to ensure that we get the scheme right. The Government’s own “Giving” White Paper, published last year, made it clear that they wanted to work more with business and charities to make it “easier and more compelling” for people to give time and money, and so make the change that they want to see. Our amendments would make it much easier for the Government to meet their aims.
	New clauses 1 and 2 would ensure a proper review of the impact of the measures on access to the scheme. The charity and voluntary sector deserves to have the rules properly reviewed, with a report being laid before Parliament so that all Members can see how accessible the scheme is. I hope that, in the spirit of openness and transparency that the Government say they are in favour of, all Members will consider supporting the new clauses.
	The simple principle of giving charities the extra bit of help that is contained in the Bill is very much welcome, but the proposals could and should go further. As the Bill stands, thousands of small charities could lose out. Our amendments would take a few steps towards giving charities that extra support, and I hope that Members will support them.

Mark Durkan: As other hon. Members have already said, many practical concerns and suggestions were aired and shared by members of the four parties represented when we discussed the Bill in the Public Bill Committee. It is important that we use the Report stage to return to a number of those issues. I do not intend to rehearse all the arguments that were made in Committee. This is not the time for “Here are our best bits” or for simply making our pitches again. However, it is important to reflect on the fact that the Minister indicated that he was listening to some of the points that were made in Committee, even if he refuted many of the others. That is reflected in some of the Government amendments that he will no doubt speak to later. I welcome the fact that further progress has been made, just as I welcome the fact that, in Committee, the Minister tabled an amendment to clause 2 as a direct response to an issue that I had raised on Second Reading. I appreciate his doing that.
	There is still a basic problem with the Bill. The original Budget promise made by the Chancellor of the Exchequer was widely welcomed across the House, and certainly in the charity sector. People expected something along the lines of what they thought had been promised—that the equivalent of gift aid would be available, with certain conditions, to charities, without them having to fulfil all the gift aid criteria and the necessary processes attached to them.
	As I said, that was widely welcomed, but the Government then produced a scheme that was absolutely dependent on gift aid; gift aid was the qualifying prerequisite. Even with the Government amendments so far and the further Government amendments tabled for debate today, the provisions are still locked into the requirement that gift aid is the prerequisite for qualifying for these top-up payments.
	In the Public Bill Committee, the Opposition Front-Bench team tabled various amendments aimed at trying to ensure that the scheme was not based on gift aid and not run by Her Majesty’s Revenue and Customs. I did not necessarily sympathise with those amendments. I could see the point of saying that if a scheme operates in the spirit of gift aid, the payments would be made by HMRC. However, I do not accept that the practice or use of gift aid by a charity should be the only way in which it should benefit from the sort of measure that I believe all hon. Members would want to see. That is why I have tabled new clause 3, a variant on provisions I proposed in Committee.
	The point of the new clause is to provide a route 2 option to allow smaller charities or newer charities to benefit from the same capacity that the Bill confers on larger and more established charities. It is about creating a second scheme whereby HMRC would be able to support charities and top up their donations to exactly the same limits and levels as would be available to the other charities; there would be no differentiation. However, these charities would not be caught by the obligation to have claimed gift aid in the previous three years—or the previous two years as proposed now, or eventually only one year if a review amendment is passed, and the review amendment locks in the fact that there has to be at least a previous tax year in which gift aid was claimed.
	New clause 3 is aimed at saying, “Let’s have a second scheme.” If the scheme provided is one of complementary gift aid where HMRC will complement all the gift aid payments with the other top-up payment, there should also be a supplementary top-up payment scheme for the smaller charities that do not use gift aid—and they might have their own reasons for not using it. Small local charities may depend on cash donations and may rely on school students to carry out a lot of their collections. In those situations, people are not going to register gift aid details. Many charities say that people avoid giving gift aid details nowadays, simply because they are afraid that it will generate an awful lot of demands through the post for all sorts of other donations if their details are passed on. It is not necessarily that people do not want to give gift aid; they sometimes do not think the amount involved is worth giving out their details for, or they are not sure what else that could lead to. Let us understand why many charities do not use gift aid nowadays and may not want to rely on or use it much in the future. When we are legislating for a scheme such as this, we need to realise that we are legislating as far as possible for all charities.
	Other hon. Members have made the point that many charities are created in response to particular events in a community. Those events could be a tragedy; they could have had a serious criminal impact on a community or the families within it; they could involve the impact of a natural disaster. Only this weekend, we saw the serious impact of flooding in many places. Are we really saying that we want to make sure that bona fide charities set up in response to such circumstances are the bodies that we specifically want to exclude from the scheme? Are we deliberately and specifically as legislators saying that they should not benefit from this sort of scheme? I think that as MPs we should be trying to ensure that such charities do benefit. In future, many of us may well write to Treasury and other Ministers on behalf of
	those charities, asking for some extra statutory basis to be found to allow a particular charity to benefit. That is why I commend new clause 3 as one way of meeting Members’ concerns.
	If the Government fear extending the scheme to all charities because they will not be able properly to oversee, regulate, manage or verify it, we have to find a way of allowing the Government to cater for the other charities while ensuring that the scheme remains proofed against fraud. That is why new clause 3 provides that it is for HMRC to specify what other validation and verification it would need from these smaller and newer charities. It also allows HMRC to indicate which agencies can be involved, whether it be registered members of a particular professional body such as accountants or local authority figures. When charities are set up in response to particular events, it is often a mayor or a council chief executive who gets involved. The new clause also provides that in specifying who can be used to verify the charity’s details, HMRC will liaise with the relevant devolved authorities, charity regulators and charity commissioners. It might even rely on the police, because many of the small local charities that gather money in bucket collections do so on the basis of having secured a police licence or police approval, so why not join the dots and allow the police to be involved? Perhaps this is something for the police and crime commissioners to do, as nobody is quite sure what else they are going to do. They could be made part of the chain of communication and verification.
	New clause 3 is an attempt to help the Government extend the benefits of the Bill to even more charities than will qualify for and receive benefits under the current provisions. It is intended to reflect some of the issues raised by hon. Members on Second Reading and again in Committee.
	Will the Minister explain why there should not be two different routes of provision for charities, according to their scale, their size and their circumstances? He seemed to suggest in Committee that this would be a dangerous and difficult thing to do, but we often see the Treasury legislating and regulating differently in other areas according to size and scale. In the Financial Services Bill, for example, which is still stuck in the other place, the Government provide for different panels in respect of the whole matter of financial conduct. There is a markets practitioner panel and a small business panel, taking account of the fact that different people involved in financial services are operating on a different scale of business. There will also be the consumer panel. So there is differentiation, as there also is in respect of prudential regulation, financial conduct and so forth. If all those differences could be taken into account in the financial services industry, it seems strange that the Government say it is impossible for them to take account of working, practical, natural differences relating to the scale and circumstances of charities.
	Similarly, credit unions also come under financial regulation, and the Treasury is quite happy to base its regulation of credit unions on version 1 and version 2 credit unions. Versions 1 and 2 have different criteria and they quality for different benefits according to different capacities. I see no reason why there should not be a version 1 and a version 2 scheme for small charitable donations top-up payments. That is essentially what new clause 3 offers.

Sheila Gilmore: Being a member of a Public Bill Committee, particularly a Back-Bench member, can be a soul-destroying experience. It often seems to Opposition Members—under all Governments, I am sure; I do not intend to suggest otherwise—that what happens is this: the Committee debates the amendments that we have tabled, the Government generally oppose them, in some instances there is a vote, the Opposition generally lose the vote unless the Government have been uncommonly careless in losing some of their members somewhere in the building, and we move on to the next debate. However, that is probably not what the public think is involved in the scrutiny of a Bill in Committee.
	When I became a member of the Committee, I wrote in my local newsletter that I was quite excited about it. Because the Bill did not appear to me to have created huge party political dividing lines, I believed that we would have the sort of opportunity for scrutiny that does not always arise. Unfortunately, however, there came a time when I began to feel that that was not the case, and that, for all my hopes that we would be open with one another about what was right and wrong with the Bill, we were merely engaging in those traditional Committee procedures. I was therefore extremely pleased to observe that the Minister, who had given little away in Committee, had tabled Government amendments on Report. That, I think, shows that he listened to what was said in Committee, and subsequently thought about difficulties that had been created during the drafting of the Bill but had not really been intended by legislators.
	We must surely acknowledge that returning the time for which a charity must have existed before it can even claim under the scheme to two years, as the Government amendment proposes, would be an improvement, although our new clause takes a rather different approach. At least the amendment recognises that charities, particularly new charities, need a great deal of help. However, part of the problem with the Bill has been the fact that it is so strongly hitched to the gift aid mechanism.
	It was assumed that small charities that could not obtain money through gift aid should be helped by means of the mechanism that already existed. That created a huge extra obstacle race. In fact, there will still be an obstacle race even if the Government amendments are accepted. The charity must be registered, it must have existed for a certain number of years—for the three years originally proposed, or for two—and it must be registered for gift aid. For all the reasons that have already been given, that can be quite a cumbersome process, particularly for small organisations that are entirely run by volunteers.
	The whole apparatus of gift aid is quite complex, and the original mechanism involved a fairly lengthy process. It seemed to us in Committee that very small charities in particular were being expected to jump through a huge number of hoops to make their claims. Ironically, it appeared that they would be faced with far more obstacles than larger organisations which were claiming substantial amounts of gift aid, and that a scheme that had been intended to benefit small organisations was unduly elaborate.
	It appears that the Government intend to retain the link with the gift aid arrangements, but I hope that there is still space for our proposals. New clause 3, for example, suggests a way of removing some of the
	complexity from the system to allow start-ups of small and sometimes fairly short-term charities. It is a good idea to enable people to set up charities for a particular purpose and perhaps to close them down once they have had a dab at what they need to do. Perhaps we are rather too inclined to keep organisations going just for the sake of keeping them going, rather than saying, “It has done its job, and we can wind it up.” Sometimes that is the appropriate thing to do.
	I am pleased that the Government have tabled their important amendments, but I hope that, even at this stage, the Minister will be prepared to look kindly on the proposals presented from various parts of the Opposition Benches, including the new clauses proposing a review. It is often said of reviews, particularly by Governments, that it is unnecessary to demand them because they will take place in any event: because part of a Government’s activity is constantly to review what they are doing. That should indeed be the case, and one hopes that it is, but in reality there are many competing pressures. Many things have to be done, and time moves on.
	When a Bill such as this goes on to the statute book, at one level it is done and dusted, and it is pushed aside. Civil servants, and indeed Ministers—even Ministers in the same Government, although not necessarily—may not return to it regularly unless required to do so. Rather than waiting for a problem to arise, and for organisations to campaign for a review because the present system is not working, we should create a clear mechanism that cannot just survive the Government who produced the legislation, but survive future Governments.
	Various concerns have been expressed, particularly by those who need to make the legislation work, namely the charities themselves. They are doubtful about whether the Bill will deliver what has been promised. The Government have suggested that some of those concerns may be exaggerated, that many charities that apply for gift aid will find the process easier than they had thought, and that we should not be so depressing as to put off charities in our constituencies. Indeed, the Minister has encouraged us all to organise our own publicity, and to arrange events encouraging charities to apply. That is all very worthy, but if the concerns that have been expressed have some foundation, the best way of establishing the facts will be a process of regular review and report. I do not think that it is enough for Ministers to say, “It will be all right, because somewhere in the system reviews will be taking place anyway.” We could all come up with examples of circumstances in which reviews do not happen until something goes wrong, or a big campaign has to be organised to put pressure on a future Government.
	I hope that, now that the Minister has shown his willingness to move on the Bill, we shall see some further movement tonight.

Sajid Javid: I will start by reflecting on the Bill’s constructive Committee stage, and I thank the Opposition for their continuing support. I also thank the hon. Members for Edinburgh East (Sheila Gilmore), for Clwyd South (Susan Elan Jones), for Banff and Buchan (Dr Whiteford), for West Dunbartonshire (Gemma Doyle) and for Foyle (Mark Durkan) for their contributions to today’s debate. I will try to answer as many of the issues raised as I can.
	Proceedings in Committee, and now on Report, have provided an excellent challenge to and scrutiny of the legislation—as they should have done—and I hope it is
	clear from the amendments that they have tabled that the Government have listened to hon. Members from across the House. The amendments in this group cover mainly the eligibility conditions for charities that wish to claim under the small donations scheme. New clauses 1 and 2 would have a wider effect, as they require HMRC to publish certain details about the scheme as a whole. Amendment 21 would require HMRC to publish details of the connected charities and community buildings rules. Government amendments 28 and 29 are minor and technical and simply change the Government Department to which powers in clauses 7 and 8 are given.
	In Committee we debated a variant of new clause 1 and the same text of new clause 2. I opposed the measures then, and I am afraid I shall oppose them again today, as I will amendment 21. As I explained in Committee, we need neither the new clauses nor amendment 21. We are already doing much of what they ask and it would not be a good use of civil servants’ time to duplicate that work.
	Let me start with the annual report. As I said in Committee, HMRC publishes national statistics on the cost of various charitable tax reliefs three times each year. Once the gift aid small donations scheme is up and running, HMRC will include details of that in those national statistics. HMRC does not separately identify gift aid claims by types of organisation, regions of the UK, or their regulators. Those details are not published for gift aid claims and it would not be a good use of HMRC’s time to produce such information for this scheme.
	HMRC does not collect information on whether a charity is exempt or excepted. Charities would have to provide that extra information, and HMRC would need to change its IT system to cater for that. Again, that cannot be a good use of resources for either charities or HMRC. HMRC does not publish details of fraud rates in particular schemes or tax reliefs, as that would be tantamount to advertising them to fraudsters. I therefore cannot commit to publishing such information. All information that HMRC can reasonably publish will be published, and interested Members will be able to find all relevant information on its website.
	New clause 2 would require a review of the scheme two years after the Act comes into force. As I said in Committee, the Government are committed to a review of the scheme three years after it has started. That will allow enough time for the scheme to get up and running, and for charities to learn about it and get used to claiming. Any less time than that, and the review would not be representative of the scheme. A two-year review would be premature, but it would be wrong to think that no one will look at the scheme for three years. HMRC engages with charities every day through its helpline, outreach and audit teams. It will listen to what charities are saying and look for ways to improve the scheme.
	HMRC’s charity tax forum has been discussing this scheme since it was announced in March 2011. The forum will share experiences of the scheme as it beds down, and identify areas for improvement. HMRC keeps all guidance under review and makes changes as necessary so that any issues raised can be responded to without having to wait for three years to pass.
	Amendment 21 would require the Treasury to carry out a separate review of the scheme in relation to the community buildings and connected charities rules. As
	they currently stand, the community buildings and connected charities rules will affect only a few charities. For the vast majority who take advantage of the scheme, such rules will be irrelevant and can be ignored. Most charities are not connected with other charities, and do not operate within community buildings or collect more than £5,000 in small cash donations.
	We will debate later more Opposition amendments on the community buildings and connected charities rules. The amendments would extend those rules—and their complexities—to a far larger number of charities. Whatever the outcome of that debate, I do not believe that amendment 21 is necessary. I have already said that we will review the scheme after three years, and that review will be wide-ranging and look at all aspects of the scheme. It seems unnecessary and wasteful to hold another review 12 months earlier to look at just a small part of the scheme; it would be better to review everything at the same time.
	The hon. Member for Harrow West (Mr Thomas) spent two Committee sittings setting out his concerns about HMRC, which he doubted would have enough resources to administer the scheme—if we go ahead with all these reviews and reports, he may well be right. I do not feel that the new clauses or amendment 21 are a necessary or effective use of public resources, and I therefore ask the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) not to press them.
	New clause 3 was tabled by the hon. Member for Foyle, and amendments 32 and 33 by the hon. Member for Banff and Buchan. They are designed to support new and smaller charities and to mitigate the effects of a three-year eligibility period. I hope that hon. Members have noted the amendments that I tabled on eligibility requirements, and that my proposal to drop the eligibility period to two years goes some way to allaying their concerns.
	We debated new clause 3 at length in Committee, but I am afraid the concerns that I raised still apply. HMRC would be expected to gather information from other agencies to check the credibility of small charities. That would place a significant administrative burden on it to verify each and every charity that applied through that route. HMRC would be required to make subjective judgments about whether a charity was in or out, and would be constantly at risk of a legal challenge to its decisions. The scheme would be impractical in operational terms and I ask the hon. Member for Foyle to consider not pursuing the new clause.

Mark Durkan: The Minister suggests that under the new clause, HMRC would have to check with all sorts of other agencies, but the measure clearly states that HMRC can provide for a scheme to which charities may apply. It would be up to the charities to produce and submit the verifying information. It would not be HMRC’s duty to verify information with other charity regulators or anybody else; it would be up to the charity making the claim to produce the necessary evidence as laid down in the scheme.

Sajid Javid: I thank the hon. Gentleman for that point. He sat on the Public Bill Committee and will understand from those debates—probably more than most Members in the Chamber today—the eligibility requirements. I know that he welcomes some of the
	Government amendments, but the remaining eligibility requirements provide a degree of protection for the public purse, so that charities that make claims and use the benefits introduced by this Bill are those that HMRC has good reason to believe are using the measure in the right way, and there is protection against fraud. I have looked closely at his new clause, which he has tabled with the best of intentions, but it is not a change that we can afford to make at the moment.
	I turn to amendments 32 and 33, tabled by the hon. Member for Banff and Buchan. Again, I am afraid I cannot support them. They would allow certain charities— those with an annual income below £25,000 and those set up for specific projects and events, such as she described—to claim top-up payments from the time when they were established without meeting any other eligibility requirements. I sympathise with the intention behind the amendments, but they would cost a lot of money—tens of millions of pounds.
	Most small charities starting up have an annual income well below £25,000, and those set up in reaction to events such as disasters would also qualify for payments under the amendments, so nearly every new charity would qualify immediately. As I said, I sympathise with the intentions behind the amendments, but it is essential to have some eligibility requirements, otherwise the scheme will be wide open to fraudsters and the cost to the public purse will rocket.

Eilidh Whiteford: The charities in question would be registered with charity regulators on both sides of the border, and those are surely the bodies that decide whether their purposes are charitable. What benefit will the Bill bring to people raising money for a one-off or fixed-term good cause?

Sajid Javid: The Bill is intended to complement gift aid, because the Government received many representations from charities that when they received cash donations, such as in bucket collections, they were unable to take the information necessary for gift aid, such as whether the individual was a taxpayer and their name, address and other information. The scheme is intended to address that. One-off charities, including those set up in response to a disaster, are worthy causes but do not fit into how we intend the scheme to complement gift aid.
	To answer the last part of the hon. Lady’s question, if a charity is created in response to a particular event or disaster, there is nothing to prevent it from registering for gift aid immediately and taking advantage of the gift aid provisions that already exist. If it stayed in existence for a number of years and therefore met the new eligibility criteria, it could also take advantage of what is available under the Bill. For the reasons that I have given, although she introduced her amendments with the best of intentions, I ask her kindly to consider not pressing them.
	Amendments 8 to 16 would abolish the three-year start-up period and allow charities that have made a gift aid claim in the previous year to claim under the scheme. The maximum donations that could be claimed on would be £2,000, instead of £5,000. Proposals for a reduced rate for new charities have been put forward several times, and I am afraid that I cannot support
	them. Reducing the eligibility period to a year or less would increase costs, which would include a lot of costs caused by fraud. Requiring just one gift aid claim would leave the scheme open to unacceptable abuse.
	The amendments would also make the scheme very complicated for some charities. Charities would need to know which other charities connected with them had claimed, and at which rate, because the rules would be different depending on those factors. The Government have listened to all the concerns that have been expressed about the eligibility rules, and we have put forward our own proposals. Our amendments are safe and affordable, and they will minimise complexity. I therefore ask Opposition Members not to press amendments 8 to 16.
	I turn to the amendments that I have tabled on eligibility. Amendments 24 to 27 will reduce the eligibility period for the scheme to two years, and amendment 31 will introduce a power to enable us to amend the criteria in future if necessary. The eligibility criteria have been a key issue raised by the charity sector throughout the development of the scheme, and by Members in our earlier debates. The sector has welcomed the amendments since I tabled them last week, and I hope that hon. Members will support them, too.

Nigel Mills: Can my hon. Friend explain the logic of why amendment 31 will take away the Government’s power to amend the provision requiring a gift aid payment in a previous year, yet amendment 30, which we will come to later, will give them the power not to require any matching gift aid amount in the next year? The impact will be that a charity can make a claim without having any gift aid claims in the current year, but will have to have claimed at least a pound in the previous year. Is it not slightly perverse to table amendments with those two opposite intentions?

Sajid Javid: I believe that they fit together, and I hope that the purpose of the Government amendments will become clear.
	Concerns were raised that the eligibility criteria in the Bill were too restrictive, that too many charities that did not already claim gift aid would be put off the scheme because it would take too long to become eligible, and that some short-lived charities would never reach eligibility. Balanced against those concerns is the fact that the Government have always been concerned to protect the scheme against fraud. I have looked again at where the balance lies between accessing the scheme and protecting it from people who would try to exploit and abuse it, and I have concluded that we can reduce the eligibility period to two years without undermining the integrity of the scheme. Eligibility for the scheme is defined by reference to successful gift aid claims made by a charity in the past, and I now propose that the minimum period should be set at two years.
	I shall explain in more detail what our amendments will do. Four factors will determine the eligibility of a charity or community amateur sports club for the scheme, as set out in clause 2. The first is the start-up period—the number of complete tax years for which a charity must have been established before it becomes eligible for the scheme. We are reducing that period from three years to
	two years, so a charity or CASC will now be able to access the scheme a year earlier than was originally set out. The second and third elements are that a charity has to have made claims in two of the previous four years, and that there is a gap of no more than two complete tax years between the claims. The amendments will ensure that HMRC is guaranteed to see a minimum level of claiming activity by the charity or CASC in question, so that it can get to know that organisation and understand its ability to claim gift aid correctly.
	The fourth element is the impact of a penalty on eligibility. If a charity receives a penalty, it will be excluded from the scheme for the tax year in which it makes the claim and the following tax year. Originally, the charity would have been excluded for the following two years, but amendment 26 means that the exclusion will be for only one year following the year of the claim.
	That all adds up to a significantly more accessible scheme for new charities that have not claimed gift aid before, but we do not know exactly how the scheme will operate in practice. As I have said, we will review it after three years, when we might find that fraud rates are much higher or much lower than expected, so it is sensible to build flexibility into the Bill to amend the eligibility criteria in future. Many charities have asked the Government to do that. That power will enable us to vary the elements of the eligibility criteria up or down, depending on the evidence that we see on how the scheme operates and its susceptibility to fraud.
	Those four elements interact with each other, and with the matching criteria, to provide safeguards for the scheme. We want to build the maximum flexibility into the Bill by allowing each of those periods to be reduced, increased, removed or reinstated. Any use of that power would be through the affirmative procedure, so it would be consulted on and subject to debate in the House. However, we do not want flexibility to undermine the integrity of the scheme or its important link with gift aid, so the requirement for a charity to make a minimum number of gift aid claims over a set number of years will always remain.
	I now turn to the last set of amendments in this group. Since the Public Bill Committee, we have reassessed the distribution of powers to make secondary legislation in the Bill, some of which are conferred on the Treasury and some on HMRC. Broadly speaking, a power that changes the nature of the scheme in some way should be exercised by the Treasury. A power given to HMRC should be to allow the collection and management functions to be carried out correctly. The powers in the Bill are currently inconsistent with that approach, so we are introducing amendments 28 and 29 to change the powers in clauses 7 and 8. Those relate to running charitable activities in a community building and the definition of a community building. The powers are currently assigned to HMRC, but we now think it would be more appropriate to assign them to the Treasury. That is because they could be used to make significant changes to what is in or outside the scope of the rules. I hope that that helps explain why we have tabled those amendments.
	I come now to my conclusion, Mr Deputy Speaker. [Hon. Members: “Hear, hear.”] The conclusion is very popular. I do not consider that there is any need for statutory reviews of the scheme at 24 months, and neither is there a need to require HMRC to publish
	certain data. There will be a full review of the scheme after three years, and HMRC will be publishing what data it has three times a year. New clauses 1 and 2, and amendment 21, would be wasteful and would require duplication of resource for no good reason. I therefore ask the hon. Member for Kilmarnock and Loudoun not to press those to a Division, just as I ask other hon. Members not to press new clause 3, amendments 32 and 33, and amendments 8 to 16.
	I hope that hon. Members are comforted by the Government amendments that will reduce the three-year eligibility rules to two years. I am introducing a set of amendments that do what many charities and hon. Members have asked us to do, which is reduce the barriers to entry for this scheme and cut the eligibility period. I accept that some hon. Members wanted me to go further, but that would leave the scheme too exposed to fraud. These amendments represent an important concession by the Government, and I call on hon. Members from both sides of the House to support them. I am also introducing two technical amendments, Nos. 28 and 29. I commend the Government amendments to the House.

Cathy Jamieson: I will not take up much time. [Hon. Members: “Hear, hear.”] It is always great to be popular. The Minister has gone some way towards addressing the concerns we raised in the Public Bill Committee, but I feel it is important that we press new clause 1 to a Division.

Question put, That the clause be read a Second time.
	The House divided:
	Ayes 175, Noes 268.

Question accordingly negatived.

Clause 1
	 — 
	Top-up payments in respect of small donations made to eligible charities

Cathy Jamieson: I beg to move amendment 4, page 1, line 17, leave out ‘maximum donations limit’ and insert ‘the specified amount.’.
	This amendment is consequential on amendment 3.

Lindsay Hoyle: With this it will be convenient to discuss the following:
	Amendment 3, page1,line19, leave out subsections (4) and (5).
	This amendment removes the matching principle from the bill.
	Government amendment 23.
	Amendment 1,page2,line1, leave out ‘double’ and insert ‘triple’.
	To increase the maximum claim to triple the amount of gift aid claimed each year. Cathy Jamieson
	Amendment 5,in clause 4, page3,line13, leave out ‘for the purposes of section 1(4)’.
	This amendment is consequential on amendment 3.
	Amendment 6,in clause 6, page4,line27, leave out ‘for the purposes of section 1(4)’.
	This amendment is consequential on amendment 3.
	Amendment 17,page4,line38, leave out paragraph (a) and insert—
	‘(a) the sum of the small donations that are made to the charity in the community building in the tax year, or’.
	This amendment seeks to remove the requirement that donations under the community buildings amount can only be made by group members while the charity is running its charitable activities.
	Amendment 18,page5,line3, leave out ‘by group members while it is running charitable activities in the buildings’.
	This is consequential on amendment 17.
	Amendment 19,page5,line5, leave out subsection (6).
	This is consequential on amendment 17.
	Amendment 20,in clause 7, page5, leave out lines 20 and 21.
	This is consequential on amendment 17.
	Amendment 7,in clause 9, page6,line29, leave out ‘for the purposes of section 1(4)’.
	This amendment is consequential on amendment 3.
	Government amendment 30.

Cathy Jamieson: Again, I hope not to detain the House to any great extent. As the Minister will recall, we consistently pushed the Government to reconsider the matching principle in the Bill as we believed that it was too onerous for many small charities and would mean that many of them could not benefit from a scheme that was supposedly set up to help them.
	The Government amendments show that the Minister has bowed to the pressure not just from members of the Committee but from people in the charitable sector who had serious concerns about the impact of the measures from the very start. I will not repeat all the comments made by the different organisations over the course of our discussions about the Bill.
	We could of course continue to argue for the matching principle to be dropped completely and could make a case for that. However, given that the Government have seen fit to introduce changes that will take the ratio from 2:1 to 10:1, I think we should recognise that they have moved a significant amount, which has been welcomed by the sector. I look forward to hearing what the Minister has to say about his amendments and I want to make it clear that I do not think our amendments are required at this point as they have been superseded by his.

Nigel Mills: I wholeheartedly agree with the hon. Lady. In Committee, the Minister promised to make the situation more generous, but last week I saw that no
	amendments had been tabled to that effect. I thought that I would just try to help him be a little more generous by reflecting the wishes of a local church in my constituency that had asked me to try to make the figure three times, not twice. I have no desire to be only a third as generous as the Treasury and so welcome this move by the Minister. I think that it is a sign that he has listened to the argument. I genuinely hope that this new-found generosity in the Treasury will extend into next week.

Sajid Javid: We have had a constructive and lively debate so far. I welcome the comments of the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) and, in particular, her decision not to press her amendments. I also welcome the comments of my hon. Friend the Member for Amber Valley (Nigel Mills) and his decision not to press his amendment. He has recognised that Government amendment 23 will reduce the matching rate by 10%, which is even more generous than the reduction proposed in his amendment. I cannot promise him that this generosity will continue into next week—we will have to wait and see what happens then—but he does tempt me.
	I will say a few words about why the Government have brought forward these amendments. Although some hon. Members wanted to remove the matching rate altogether in Committee, I understand that they accept that the Government have listened and that a 10% rate is much more generous than what was offered when the Bill was first introduced.
	Let me say explain why we have this matching provision. HMRC sees even the 10% rate as an act against gift aid fraud. Unfortunately, there are unscrupulous individuals who want to misuse charitable tax reliefs. They defraud the taxpayer and undermine the good name of the charitable sector, so we must be in a position to protect the taxpayer and the charitable sector. The lack of records also means that HMRC would have less evidence when a charity is claiming correctly under the scheme if there was no kind of matching principle. Gift aid is the closest proxy we can use to help ensure compliance under the new scheme, and the matching requirements will significantly increase protection against fraud and abuse.
	Government amendment 30 introduces a wide-ranging power that will allow us to reduce or increase the matching rate. It will allow us to remove the matching provision entirely or reinstate it at a later date if it is removed. Removing the matching provisions altogether would remove the need for charities to claim a set proportion of their small donations claim in gift aid in that year. Even so, charities would always need to claim some gift aid in each year to ensure that they can claim under the scheme. That is because of the provision in clause 1(1)(b). That helps to retain the important link between this scheme and gift aid.
	Any use of that power would be through the draft affirmative procedure, so it would be consulted on and subject to a debate in this House. That power means that the matching rule is fully flexible. We have no intention of using the power in the near future, but it will be there if we need it. It is something that many charities have asked us to introduce, so I am pleased that we have been able to do so. I believe that the
	Government’s approach is better than some of the other amendments that have been tabled, as has been recognised in the comments we have heard.
	We debated the community buildings rules in some detail in Committee so, unless hon. Members have questions, I do not propose to go into much detail now, but I would like to remind Members that the purpose of those rules is to recognise that not all charities are structured in the same way. There are charities that, because of the way they were set up or for other reasons, effectively operate as branches of a master charity. We want to ensure that the proposals are as fair as possible and that branches of a bigger charity are effectively treated as individual charities and have their own £5,000 limit. The purpose of the community buildings rules was not to give more than £5,000 by allowing charities to have multiple claims, and I believe that the changes we are making to the Bill will achieve that effectively.
	I again warmly welcome the support the House has shown for the Government amendments and thank the hon. Member for Kilmarnock and Loudoun for looking at them carefully and not pressing her amendments. I commend amendments 23 and 30 to the House.

Cathy Jamieson: I beg to ask leave to withdraw the amendment.
	Amendment 4, by leave, withdrawn.
	Amendment made: 23,page2,line1, leave out ‘double’ and insert ‘10 times’.
	This amendment changes the gift aid “matching” rate from 2:1 to 10:1. In other words, to make a claim in respect of £5,000 of small donations, a charity would need to make successful gift aid claims in respect of £500 of donations, rather than £2,500.
	—
	(Sajid Javid.)

Clause 2
	 — 
	Meaning of “eligible charity”

Amendments made: 24,page2,line12, leave out ‘3 of the previous 7’ and insert ‘2 of the previous 4’.
	This amendment, and amendments 25 to 27, change the criteria for determining a charity’s eligibility for the small donations scheme. Under this amendment, the charity must have made successful gift aid claims in 2 out of the previous 4 tax years, rather than 3 out of the previous 7.
	Amendment 25,page2,line16, leave out ‘3’ and insert ‘2’.
	Under clause 2(2), earlier gift aid claims are ignored for the purpose of the eligibility rules where a charity doesn’t claim for 3 consecutive tax years. This amendment reduces that period to 2 consecutive tax years.
	Amendment 26,page2,line22, leave out ‘2 tax years’ and insert ‘tax year’.
	This amendment reduces the period for which a charity is not eligible where a penalty is imposed on the charity. Under the amendment, the period will be the tax year the claim was made and the next tax year (rather than that year and the next 2 tax years).
	Amendment 27,page2,line26, leave out ‘3’ and insert ‘2’.—(Sajid Javid.)
	This amendment reduces the “start-up period” for a charity to the first period of 2 (rather than 3) consecutive tax years during which it is at all times a charity.

Clause 7
	 — 
	Meaning of “running charitable activities in a community building” etc

Amendment made: 28,page5,line24, leave out ‘HMRC’ and insert ‘The Treasury’.—(Sajid Javid.)
	This amendment makes the Treasury, rather than HMRC, responsible for making orders under clause 7(3).

Clause 8
	 — 
	Meaning of “community building”

Amendment made: 29,page6,line4, leave out ‘HMRC’ and insert ‘The Treasury’.—(Sajid Javid.)
	This amendment makes the Treasury, rather than HMRC, responsible for making orders under clause 8(5).

Clause 14
	 — 
	Power to alter specified amount etc

Amendments made: 30,page11,line5, at end insert—
	‘(1A) The Treasury may by order amend this Act for the purpose of—
	(a) amending the gift aid matching rule;
	(b) abolishing that rule;
	(c) reinstating that rule (if previously abolished), with or without amendment.
	(1B) In subsection (1A) “the gift aid matching rule” means the rule that limits the amount of top-up payments to which a charity is entitled by reference to the amount of gifts made to the charity in respect of which it has made successful gift aid exemption claims.’.
	This amendment gives the Treasury power by order to amend the gift aid matching rule (see clause 1(3), (4)(a) and (5)), to abolish the rule or to reinstate it. The order would be made by statutory instrument subject to draft affirmative procedure in this House (clause 17).
	Amendment 31,page11,line5, at end insert—
	‘(1C) The Treasury may by order amend section 2 (meaning of “eligible charity”).
	(1D) Section 2, as amended by an order under subsection (1C), must as a minimum include a condition requiring the making of a successful gift aid exemption claim in a previous tax year.’.—(Sajid Javid.)
	This amendment gives the Treasury power by order to alter the eligibility rules in clause 2. But the altered rules must include a condition requiring the making of previous gift aid claims. The order would be made by statutory instrument subject to draft affirmative procedure in this House (clause 17).

Schedule 1
	 — 
	Meaning of “small donation”: conditions

Eilidh Whiteford: I beg to move amendment 34, page 14, line 4, leave out ‘in cash’.
	This amendment allows for gifts made by contactless cash card and mobile telephone transactions where it is impractical to obtain a gift aid declaration.

Dawn Primarolo: With this it will be convenient to discuss the following:
	Amendment 35,page14,line5, leave out ‘of cash’.
	Consequential on amendment 34.
	Amendment 36,page14,line9, leave out ‘“cash” means coins and notes in any currency’.
	Consequential on amendment 34.
	Amendment 22,page14, leave out line 9 and insert—
	‘“cash” means coins, notes, cheques and money donated electronically in any currency.’.
	This amendment seeks to include non-cash donations within the Gift Aid Small Donations Scheme.
	Amendment 2,page14,line9, after ‘currency’, insert ‘and any equivalent electronic payment as may from time to time be prescribed by the Treasury by order.’.
	To future proof the Bill by enabling the Treasury to allow electronic payments to be treated as allowable donations.
	Amendment 37,page14,line16, leave out ‘cash’ and insert ‘gift’.
	Consequential on amendment 34.

Eilidh Whiteford: The last time the House debated the Bill, I raised the challenge of new ways of donating to charity. The purpose of the amendment is to take account of changes in the way people donate to charities, recognising the sea change that has occurred over the past 10 years or so in how they donate and the fact that people increasingly donate small amounts through text message giving. The technology driving us in that direction is developing rapidly. Conversely, and perhaps somewhat paradoxically, the amendment would also allow charities to benefit more from small donations made by cheque.
	The thinking behind the amendment is derived from work done by the Institute of Fundraising. In a previous life, when I worked in the charity sector, I worked closely with the institute and so pay tribute to the immensely valuable research it undertakes to understand how and why people support charities in order to promote good charity governance and support large and small voluntary sector organisations alike.
	The reality is that technological developments, especially with smart phones and tablets, mean that the number of electronic cashless donation options is growing. For instance, I am sure that many of us watched and donated to the BBC’s “Children in Need” appeal a couple of weeks ago, many of us doing so through text message donations. The use of mobile phones as cashless wallets is growing, and I think that the Bill would benefit by reflecting that. UK high street banks are already working on a mobile payments scheme to create a common infrastructure to link bank accounts to mobile phone numbers. That will help keep account details more secure, but it also heralds further changes in how we conduct transactions, including charitable donations.
	There are now more than 30 million contactless cash cards in circulation, contactless functionality is now available on an increasing number of mobile phones, and 68 national retailers are already live with contactless payments, including the Post Office, Marks and Spencer and W.H. Smith. There are 135,000 terminals across the UK where donations can be made. I have to confess that I personally have not yet caught up with this technology beyond automatic top-ups for my Oyster card. However, I am aware that the Cabinet Office is working with the National Endowment for Science, Technology and the Arts to explore the possibility of using Oyster cards for spontaneous charitable giving through the “Chip In” project. We should encourage
	this kind of small electronic donation, as it has significant advantages over bucket-rattling. These donations are a lot more secure, they are significantly more auditable, and they are substantially less susceptible to fraud, particularly the small-scale fraud that has always been a risk associated with spontaneous cash donations. The upper limit of payments by contactless cash cards is currently £20, which would potentially provide a nice compliance with the Bill.
	Another aspect is online transactions, which continue to grow. Between 2007 and 2012, the number of adults buying goods online increased by 9 million to 37.6 million —74% of the UK population. It would be valuable for the Bill more overtly to keep pace with these significant changes in behaviour. The Government’s impact assessment for the Bill suggests that current text giving systems make it easy to comply with the gift aid scheme, but I am not convinced that this is borne out by the evidence. Fundraisers say that only 20% to 25% of donors properly complete gift aid declarations for text donations, but some charities report that the figure is as low as 5%. That compares with 85% of sign-ups for online donations.
	The Institute of Fundraising points out that when a text donation has been made the provider usually sends a bounce-back text message with a link to a website page that the donor needs to visit to make a declaration. This is because the donor needs to complete their full name and address and to provide a declaration statement, which is a rather long thing to include in a text message. We do not have typical texting rates across the sector because providers do not give that information, but we do know that charities that have spoken out on the issue are concerned about the amount that they lose through people not completing this rather cumbersome bureaucratic process. Nevertheless, those forms of giving are auditable and would fit quite closely with the spirit of the Bill with regard to cash donations in recognising that, as time moves on, more and more of us are using different forms of contactless payments to make donations.
	JustTextGiving does not give people’s phone numbers to charities, so if someone does not respond to the initial text bounce-back there is no other way for the charity to get the donation, and declaration rates therefore remain very low. Where charities get the details, they will typically call the donor back if they have not had a response to the bounce-back. However, we have to bear in mind that if it is a mobile number, it might be a fairly expensive phone call, and if the donation has been only the £1 that the donor would otherwise have thrown in the bucket, we have to measure the cost-effectiveness of that relative to the amount of gift aid that might come back. This only really works for higher value donations.
	In its evidence to the Committee, Camphill Scotland said that as a charitable organisation it frequently uses the newer methods of collection, and that it was keen that the Bill should start to explore the possibility of new ways of enabling donations by text messages. It went so far as to say that
	“the Bill as drafted would either discriminate against those choosing to use this technology, or discourage charities from making use of this technology.”
	My amendment—this is somewhat ironic—would also cover small donations made by cheque. Very often, cheque donations are made by donors who are already known to a charity, but cheques handed over at one-off fundraising events or plate collections at funerals, for
	example, might not be so easy to identify, and it might not be worth the administrative costs of chasing up the donor. In some circumstances, filling in the gift aid declaration is a time-consuming process, and therefore not something that everyone will be able to do.
	Another reason why the amendment would strengthen the Bill is that younger people have different giving habits from other parts of the population. The Charities Aid Foundation, with Bristol university, commissioned a report entitled, “Mind the Gap—The growing generational divide in charitable giving”, published in September 2012, which identified a widening gap in giving between the over-60s and under-30s. Of course, many young people do give very generously to charity and are very involved in charitable activities, but a lower proportion of younger people are giving than older people. Making electronic giving more relevant and attractive could be one way to help to reverse this decline.
	Reputational risk is one of the greatest threats to charitable giving. A failure by one charity is felt by other charities in the same sector. While collection cans still have a valuable part to play and are a very effective means of raising money quickly, they carry an inherent susceptibility to fraud. Electronic giving diminishes the opportunity for money to go astray. It is a win-win situation. The amendment would strengthen the Bill, increase the benefits to charities, and help legislation to keep pace with the accelerating changes in technologies. I therefore commend it to the House.

Nigel Mills: I support many of the points made by the hon. Member for Banff and Buchan (Dr Whiteford). I am trying to achieve a similar end result with amendment 2. Having recognised that the Government have some problems, I tried to find a way of future-proofing the Bill so that in a couple of years’ time, when they saw the trend for cashless donation going beyond even what the hon. Lady set out, they could introduce an order to allow electronic donations to count for these purposes.
	We have to be careful. The world is moving on. Only a few weeks ago, my credit card company sent me a strange thing that I can stick on the back of my mobile phone. Apparently, I can make payments with it. I have to say that I was not quite ready to go that far. I thought, “What happens if I lose my mobile phone? I will not only have lost all my contact details but my credit card as well.” However, we can see that this direction of travel is with us. I suspect that in many ways the Treasury is quite keen for us all to become even more cashless. Tax avoidance is made much harder if everyone starts to make payments by an electronic traceable means rather than through cash. The UK is the EU nation with the highest propensity to use cashless technologies, and I think that that trend will continue.
	In its evidence to the Committee, the Royal National Lifeboat Institution said that it was not yet ready to replace its cash collecting tins with electronic swiping points. I accept that. However, I suspect that in a few years’ time that system will become rather more common and people will be out there with a placard saying, “Swipe your card here and donate a fiver to this charity.” We heard ideas about how people could swipe their Oyster cards to make small donations and how that
	might help Transport for London to get fundraisers off its stations. I gave the example of how an Oyster card that someone had finished using and that had some cash left on it could be used to donate to the Railway Children charity. At the moment, there is no way in which such a donation could be traced to see whether the donor was willing to give gift aid.
	The Minister argued in Committee that there is no need to take account of that type of giving because it is not that widely used and, where it is, it is still easier to get a gift aid declaration. I am not sure that that argument will stand firm in the next couple of years. We will start to move towards that type of giving and people will see it as an alternative to the quick cash donation. They will think, “I’ll swipe my card and give you £1, £2 or £5, and I don’t fancy stopping to fill out a gift aid form any more than I do with cash. I don’t fancy having some e-mail come from my card provider saying, ‘If you click here you can have gift aid on that.’” We need to try to future-proof the Bill so that in two or three years’ time we are not faced with charities moaning and saying, “Look, we’re getting more and more donations by some electronic means that we can’t use to claim gift aid. Can’t you change the Act?”
	I have tried to find an easy compromise for the Minister and to assuage his concerns that this is perhaps too risky, not popular enough, or not needed. I suspect that it is quite unusual for a Back Bencher to offer a Minister the power to make a change in law by order. Usually Back Benchers—I am one of them—say, “I’m a bit concerned that the Government are taking too much power to change this, and we don’t want them to have that power.” Today, I am offering the Minister a power. He does not have to use it now, this year or next year, but at some point, if this became something that would help charities and fit with the aims of the scheme, he would have a nice simplified method of making the change without needing to come back to the House with primary legislation. He has already tabled amendments to give the Treasury powers to change things by order, and none of us had a problem with that. My amendment is a gentle, helpful one, and I commend it to the House.

Cathy Jamieson: Many of us who served on the Bill Committee or listened to the Second Reading debate and have heard the representations made by the charitable sector have a degree of sympathy with the comments made by the hon. Member for Banff and Buchan (Dr Whiteford) and the hon. Member for Amber Valley (Nigel Mills), particularly in relation to ensuring that the Bill does not become out of date before it gets under way.
	The hon. Lady made some powerful arguments. Indeed, her case is reflected in our amendment 22, which relates to some of the difficulties involved in getting information from those who have made donations by means other than cheques, such as JustTextGiving, or—this issue was raised a number of times in Committee—if they have placed a cheque on a plate or in a collection box at an event such as a funeral.
	We had hoped that the Minister would give an indication—he may well do so—that he would at least be minded to consider this proposal at some point in the future. I understand that there may be technical reasons against that at present and that the Cabinet Office is engaged in ongoing work on the different
	methods of making donations and on following up on gift aid. Although I support the principles of amendment 34 and want action to be taken—that is why we have tabled our own amendment on the issue—I understand that there may be some difficulties. It would be odd, however, if the Minister said that at no point would he consider moving in the direction suggested, particularly when the Cabinet Office is engaged in those schemes.
	I hope that the Minister will be able to comfort us by saying that he will consider the proposal at some stage. I also hope that the order-making powers that the Government will adopt under the Bill could, if necessary, be utilised at some stage to extend the way in which donations can be made. It seemed odd during Committee that, while someone can donate using whatever currency they choose, donations by electronic means do not count.
	I look forward to hearing what the Minister has to say. I hope that he will take account of the persuasive case that has been made and that he will take a further look at the proposals in the amendments tabled by the hon. Lady and in my amendment 22.

Sajid Javid: I thank the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) for her comments, and I also thank the hon. Member for Banff and Buchan (Dr Whiteford) and my hon. Friend the Member for Amber Valley (Nigel Mills) for their contributions. I will try to respond to their points, which they made very well.
	The amendments would do slightly different things, but, in general, they all seek to broaden the gift aid small donations scheme to include not only cash donations, but donations in the form of electronic payments. Amendment 2 seeks to do that by introducing a power to allow the Treasury, by order, to broaden the scheme, whereas amendment 22 and the group of amendments 34 to 37 seek to expand the scope of the scheme immediately. I thank my hon. Friend for his original amendment on the issue and for all his contributions on this particular topic in Committee.
	It might be worth reminding Members of the scheme’s primary objective, which is to provide a gift aid-style top-up payment when it is difficult or unduly burdensome to collect a gift aid declaration from the donor. The most obvious examples are when a charity is making a street collection or when a religious group is passing around a collection plate during a service. In such situations it would be difficult to ask everybody who makes a contribution to fill out a gift aid declaration form. They would have to stop, confirm they were a UK taxpayer and then fill in a form with their name, address and other details. I think we would all agree that that would be unrealistic for a donation of just a few pounds. As a result, charities are missing out on potential gift aid on such donations. That is exactly why the gift aid small donations scheme is being introduced—that is what it is designed to tackle. It will fill the gap in gift aid for donations for which it is difficult or unduly burdensome to collect the necessary paperwork.
	Giving by using digital technology means that the donor is already providing some or all of their details to the charity. If any extra information is needed to make a gift aid declaration, it will be relatively small. When a charity has an ongoing relationship with a donor, they should use gift aid, if at all possible. Compared with a
	bucket collection on a busy street, it is considerably less burdensome to ask someone to provide their details if they are donating through a website or a text message. It is easy to use gift aid when making a donation through a website and it is also possible to attach gift aid donations to a text message.
	I want to sound a note of caution about complexity. Text messages and internet donations can be made from anywhere in the world, but I hope Members will agree that the UK Government should not make a top-up payment on donations made from outside the UK unless there is firm evidence that the donor is a UK taxpayer or resident. Introducing other forms of giving to the small donations scheme would make it more complicated. In order to make a top-up payment on UK donations only, charities would need to keep records of the donation’s origin. That is comparatively straightforward when rattling a tin on a UK high street, but it would become much more burdensome, if not impossible, for some charities if donations were made through texts and website visits from around the world.
	Hon. Members mentioned the possibility of making the gift aid system easier via text giving. The hon. Member for Kilmarnock and Loudoun will be aware that the Government are in discussions with a number of charities and their representative organisations about how we can do just that. The discussions are going very well and have been constructive. The Government are open to the possibility that, eventually, we might have to pass legislation to make the gift aid system easier and we are working with charities to try to achieve that.
	It is possible that new forms of electronic giving will be developed in the future that are completely anonymous. Indeed, my hon. Friend mentioned the possibility of using Oyster cards, which are anonymous. It is very early at this stage, however, to understand what technology might come along in a few years’ time, so it would be difficult to set out the circumstances in which the power he proposed could be used. Without complete knowledge of Oyster cards or other developing technologies for giving, it is difficult to know whether they would fall under the scheme’s scope and rationale. It is, therefore, possible that the power could never be used.
	I understand my hon. Friend’s concerns and he has made some important points, so I want a review of the forms of giving to be undertaken when we review the scheme after its first three years. If people are able to make completely anonymous electronic donations, we shall look again at whether the scope of the scheme should be extended. That is the Government’s commitment.
	It is harder for charities to collect gift aid declarations in the street or at a religious meeting than through other channels. That is why the focus of the scheme is on cash donations. I accept that things may change, so I am committing the Government to review the situation after three years. I therefore ask hon. Members not to press their amendments to a Division.

Eilidh Whiteford: Madam Deputy Speaker, I am sure that you will be as pleased as other Members to hear that I do not intend to detain the House for long.
	We have heard a few contributions on this group of amendments. The hon. Member for Amber Valley (Nigel Mills) was on the same page as me in looking to the future and in considering ways of giving that are already
	developing in the charitable sector. The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) alluded to some of the technical challenges that the proposals might meet and pressed the Minister on amendment 22, which she tabled.
	I have listened carefully to the Minister and heard his commitment to review the forms of giving after three years. I am sorry that he did not go further, but I do not intend to press the amendment on the basis that there will be an opportunity for the “Chip-in” pilot scheme to be evaluated. I suspect that the technology will have moved far beyond that by the time of the review. I urge him to recognise the technological advances in giving that have already taken place.
	Making a £1 text donation is like throwing a pound in a bucket. That is how we will give in the future. It will provide a better way for charities to create an audit trail. We do not know whether the people who give to someone who is shaking a bucket are taxpayers. Many of them may not be for one reason or another, whether they be pensioners or overseas students. In the same way, people making text donations may or may not be taxpayers, but I am sure that it is not beyond the wit of humanity to work out where the phones are or where the numbers are registered. Just as we are allowing this scheme to work in a proportionate way for cash donations that are collected in a bucket, we should respect the spirit of the Bill for contactless payments.
	I look forward to the review in three years and hope that the Minister will take those points on board. I beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	Third  Reading

Sajid Javid: I beg to move, That the Bill be now read the Third time.
	It is a pleasure to move the Third Reading of the Bill. It has been many months in development through consultation, drafting and a fair amount of discussion in Parliament. In a way, I am sad to say goodbye as it heads off to another place, subject of course to Members’ support for its Third Reading.
	I am sure that everyone will agree that the Bill leaves the Commons in good shape. We have considered a lot of amendments and the Government have introduced amendments where we have agreed that there was room for improvement. Not only have we introduced the amendments that Members have accepted today on reducing the eligibility period to two years and lowering the matching rate to 10%, but we were active in Committee as well. We have listened to the concerns of charities and Members, and have brought forward a number of amendments to reflect them.
	I am pleased that the Bill has reached this stage and that we are able to move towards the introduction of the gift aid small donations scheme, for which the Bill provides the legislative framework. The scheme was announced as part of a significant package of measures in Budget 2011 to encourage charitable giving and philanthropy by donors from all walks of life, from the largest donors to those who give small amounts to charity bucket collections.
	The gift aid small donations scheme is at the heart of that package. Its purpose is to enable charities and community amateur sports clubs to claim a gift aid-style payment on small donations of up to £20, for which it is often difficult to obtain a gift aid declaration. Eligible charities and CASCs will be able to claim top-up payments on up to £5,000 of small donations each year. The scheme does not require individual donors to complete a gift aid declaration, nor does it require the charity or CASC to collect and provide the donor’s details with their repayment claim, as under gift aid. The aim of the scheme is to complement gift aid, not to replace it. It is for donations for which a gift aid declaration is too difficult to collect.
	Tax reliefs for charities and charitable giving are an important source of income for charities, totalling more than £3 billion a year. Gift aid is the single largest relief and is worth more than £1 billion a year to charities. We estimate that the gift aid small donations scheme could result in additional Government funding of about £100 million a year for charities and CASCs. That represents a significant boost in income for the sector and will be especially valuable to smaller charities.
	We have worked closely with the charitable sector to try to get the scheme right. Concerns have been raised on the details of the Bill, and we have debated those points throughout the Bill’s different parliamentary stages. In developing the scheme, we have had to ensure that it operates as fairly as possible, but we have also had to ensure that it remains affordable and protected against fraud. We want the money to go to real charities that do good work, and not to fraudsters and others who would try to abuse the scheme.
	That is why we have introduced safeguards—the community buildings rule is one such feature of the Bill. We want to ensure that charities that do similar work at a local level but have different historical structures get allowances under the scheme that are not hundreds or even thousands of times different from one another. That is why we have introduced the community buildings rule. The charity sector has raised concerns about the complexity of the rule. It is true that, to obtain a simple result, we have needed to introduce detailed rules, but I am sure hon. Members will agree that that is preferable to disadvantaging some charities just because of how they have been set up.
	In conclusion, the Bill represents a potentially significant new opportunity for charities and CASCs. When it is up and running, it will give them a new stream of income and provide £100 million of new funding to the sector. It therefore represents an important part of our strategy to support charitable giving across the board.
	I thank the Opposition and Members on both sides of the House for their support of the Bill, and for the constructive way in which they have scrutinised it. Together, we have improved the Bill. I hope hon. Members join in me in supporting this important new scheme and I commend the Bill to the House.

Cathy Jamieson: As the Minister has indicated, this is an important Bill. I hope the Opposition have delivered on what we undertook to do on Second Reading, in Committee and on Report. At the outset, we said that we would attempt to ensure that the Bill came out of the
	process in better shape, doing more to support charities than the original Bill. I do not say that to be critical of the Bill as it was introduced. The Minister came into things at that stage. He has since listened to a number of the points we have raised and introduced appropriate amendments.
	The Minister said that he was sad to say goodbye to the Bill. Perhaps all members of the Bill Committee were sad when the Bill moved on. There was much agreement across the different political parties in our debates. We did not always agree—we sometimes split on party lines and we were disappointed that some of our amendments were not accepted in Committee—but we can safely say that the Bill is in better shape as it leaves the Commons. More charities will benefit more from the Bill as a result of the scrutiny. The fact that charities will benefit from an additional £100 million per annum is positive. The Minister and his team have a responsibility to ensure that the uptake is such that every penny of that money ends up in the coffers of charities and CASCs, which is where he intends it to end up—it is worth emphasising that CASCs will benefit, because we have not spoken about that in great detail and it is none the less important. The Opposition were concerned at different stages that the Minister was focused more on the potential for fraud than on the potential for take-up. We are therefore pleased at the amendments that have been made tonight. They enhance the opportunity for charities to use the Bill.
	I noted that the Minister gave the hon. Member for Banff and Buchan (Dr Whiteford) a strong assurance on a review. It would be churlish of me to say that I wish that some other areas would be reviewed, and I will do my best to remain positive at this stage. I welcome that commitment and I am sure that the Minister will be as good as his word when he says that all aspects of the Bill will be reviewed in order to ensure that any changes that can be made to assist charities will be undertaken.
	The Bill also saw the trying of new ways to deal with legislation as it goes through Parliament. For example, explanatory statements on all the amendments were included, which was helpful to the Opposition in unlocking some of the language with which the parliamentary draftsmen deal daily. It certainly put the onus on the Opposition to ensure that we were clear about the purpose of the amendments that we tabled, so that we could summarise it in 50 words—no bad thing. We also had the public reading stage and the consultation. It took a little time to get that consultation going, and the website was perhaps not as clear or accessible as it might have been, but I am sure the Minister will want to look at that and provide feedback for colleagues in the Cabinet Office. We eventually got a lot of very good information from organisations through that process.
	Several bodies engaged with us on the Bill and helped us to scrutinise it effectively and properly. They also supplied the information that we needed to table various amendments. They included the Institute of Fundraising, the Charity Finance Group, the National Council for Voluntary Organisations and the Law Society of Scotland. They all gave us information and campaigned tirelessly on behalf of the constituent organisations that they represent and of the charity sector. The Charities Aid Foundation, the National Association for Voluntary and Community Action and the Foundation for Social Improvement also provided invaluable help, support
	and advice at various stages. Notwithstanding the efforts that the Opposition have made, the Bill is undoubtedly a better one as it leaves this place because of the input of those organisations and their commitment to do the best that they can for the charitable sector.
	This is a very important Bill. It may have seemed a small Bill, but we gave it thorough scrutiny in Committee—perhaps more scrutiny than the Minister would have liked on some points of detail. As the Bill leaves this place, we can be assured that we have done our best in making representations. The Bill will make a difference to charities and perhaps changes will be made after the three-year review. I certainly hope that we will continue to look at what additional support we can give.
	I thank people for their work in Committee, including the Chairs, the officials and everyone else who gave us inspiration and comments at various stages. All of the organisations in the charity sector and those who will benefit in the future will be glad of the amount of effort that has been put into the Bill. I am happy to support Third Reading and to join the Minister in commending it to the House.

Sheila Gilmore: The process of the Bill from start to finish, including the pre-legislative stage—as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) mentioned—was very important. It is good to see that things can change. We sometimes become very rigid in this place—people take up positions and then cannot dig themselves out very easily without feeling a loss of face. A lot of improvements have been made, although some issues remain. The following may or may not prove to be the case; we will see how it works out in practice. During the pre-legislative scrutiny we attempted to grapple with the imbalance between organisations, whether national or regional in scope, which operate in such a way that each of their branches is a separate charity, and those which do not operate as a separate charity. Clearly, the Government listened to the concerns expressed, particularly by some churches, and made important changes. The by-product is a remaining complexity and an obstacle for organisations that cannot quite fit themselves into the model that has been adopted.
	I hope that the ongoing review that the Minister at various times assured us will take place—regardless of whether there is a formal review built in for certain parts of the Bill—will look carefully at whether that model can be modified. It is genuinely difficult for some organisations to meet the requirements on where the money has to be collected and the reference to community buildings—linking not only where the collection takes place, but where the charitable activity takes place. There are numerous examples of organisations that do not fit into the model that has been adopted. It clearly fits the church model, where the charitable purpose takes place at precisely the same time as the donations—the collection—but constituent elements or branches of other charities that cannot fit that model may still be unable to take advantage of the provisions, even though they are collecting money and making exactly the kind of efforts that the Bill is designed to encourage.
	Even though Opposition amendments and our suggestion of a clear review process have not been accepted by the Government—of course, it depends on what happens to the Bill in the other place; further
	amendments and suggestions may be made about how some obstacles could be smoothed further and ironed out—I hope that some of these issues will be looked at in coming years to ensure that the Bill does what we all say we want it to do and allows small charities, which take fairly low levels of collections that are critical to their operation, to be able to take advantage of it.

Ben Gummer: I have been following the Bill with great interest, as have my constituents. It is a pleasure to be here for the Third Reading of one of Her Majesty’s Government’s most progressive measures. I look forward to its being passed from this House imminently.
	The most generous people are often those with the least means. If we look at the income distribution of people who give charitable donations, we see that those who give the largest proportion of their income are the poorest. It is unfair that those who are the richest should get the biggest tax break, as it were, in the Government top-up on their donation through gift aid and by the myriad other schemes that we have discussed in this Chamber in the past year, and that people who might give £20 or £15, which would be much more than £50,000 to a rich person, should receive less of an advantage. The Bill, therefore, is a progressive and forward-looking reform of tax legislation, which will help give the same benefit to people who give little amounts of money, which for them is a great deal, as to those who might give a lot and not think so greatly about it.
	The Bill is not just good for small donors; it is also good for small charities. In all our constituencies, the people who really pull our communities together are those in the small charities, whether they be churches or charitable groups looking after the disabled, the sick or children. The Bill will make a real difference to those charities, not only because they will get more money from the Government, but because it will help bind them to their donors and, importantly, facilitate the sense of community that arises when people give what they can both in time and small amounts of money. It will help to build communities and make them better places. For that reason, I support the Third Reading of this fantastic Bill put forward by Her Majesty’s Government.
	Question put and agreed  to .
	Bill accordingly read the Third time and passed.

Business without Debate

DELEGATED LEGISLATION

Dawn Primarolo: With the leave of the House, we shall take motions 2 and 3 together.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Legal Services

That the draft Legal Services Act 2007 (The Law Society) (Modification of Functions) (Amendment) Order 2012, which was laid before this House on 15 October, be approved.

Housing

That the draft Housing Act 1996 (Additional Preference for Armed Forces) (England) Regulations 2012, which were laid before this House on 18 October, be approved.—(Mr Swayne.)
	Question agreed to.

COMMITTEES

Dawn Primarolo: With the leave of the House, I shall take motions 4 to 7 together.
	Ordered,

Communities and Local government

That Heidi Alexander be discharged from the Communities and Local Government Committee and Andy Sawford be added.

Home Affairs

That Karl Turner be added to the Home Affairs Committee.

Transport

That Tom Harris be discharged from the Transport Committee and Lucy Powell be added.

Welsh Affairs

That Susan Elan Jones be discharged from the Welsh Affairs Committee and Stephen Doughty be added.—(Mr  Randall , on behalf of the Committee of Selection.)

ACCESS TO SANITATION

Motion made, and Question proposed, That this House do now adjourn.—(Mr Swayne.)

Naomi Long: Each year, 19 November marks world toilet day. While that might, at first hearing, sound rather comical, the issue it seeks to highlight is extremely serious—that of the continued lack of access to basic sanitation for about one third of the world’s population—and it was to mark that event and highlight again this important issue in Parliament that I sought this debate.
	I acknowledge the work that the Government have been doing as part of the UK’s overall international development agenda, and I will refer to that further later, but water and sanitation still suffers from a lack of overall priority in political and investment terms, both nationally and internationally, compared with other aid portfolios, such as health and education, despite the fact that it impacts heavily on the achievement of other development objectives. The former Secretary-General of the United Nations, Kofi Annan, has noted that
	“no other issue suffers such disparity between its human importance and its political priority.”
	Clearly, without access to water, sanitation and hygiene, the progress that can be achieved in other areas is significantly constrained. The importance of access to clean water and sanitation cannot be understated. In the UK, the biggest step change in public health and mortality rates came as a result not of medical advances but of widened access to clean drinking water and adequate sanitation. During the late 19th century, as both water and sewerage infrastructure expanded dramatically, the life expectancy of an average member of the population in this country rose by 15 years—a remarkable increase delivered over a relatively short period. Indeed, the British Medical Association has recognised the commissioning of the sewerage system in London as the most important breakthrough in public health—of more significance even than the discovery of penicillin or the development of vaccines.
	As a direct result of poor or non-existent sanitation infrastructure, people—the majority of them children—are dying of diseases that, with the provision of potable water and sustainable sanitation, are preventable. In fact, they could be almost entirely eliminated. By way of illustration, I point to the fact that the biggest killer of children under five in sub-Saharan Africa, and the second-biggest killer globally, are diarrhoeal diseases, the vast majority of which are entirely preventable conditions caused by inadequate sanitation and hygiene. More children under five die annually as a result of these diseases than from HIV/AIDS, malaria and measles combined. Indeed, the disease burden of malaria itself is also impacted on by the availability of open drainage channels and sewers, providing environments conducive to the breeding of mosquitoes that spread the disease.
	Every day 2,000 mothers lose a child due to an illness caused solely by poor sanitation and dirty water. Even vaccines that hold out the hope of progress are less effective in the absence of WASH. But the impact of inadequate sanitation infrastructure is not limited to disease; it extends to the one in three women worldwide who risk shame, harassment and even physical attack simply seeking somewhere to defecate. This debate is
	timely, then, not only in the context of world toilet day but because yesterday marked the international day for the elimination of violence against women.
	I want to draw on the everyday ordeal that the lack of access to sanitation is for people, especially women, who are the most acutely affected. Globally, 2.6 billion people lack access to basic sanitation, 1.25 billion of them women—one in three women in the world lack access to safe sanitation. Put simply, privacy, modesty, cleanliness and safety are almost impossible for those who have no access to sanitation facilities. Their experience often involves trading those factors against each other simply to survive. The reality is often shame, indignity, disease and even violence.
	Some 526 million girls and women are without access to any form of sanitation. They are forced to defecate in bushes or ditches, or even in the open, their choice being between doing so in broad daylight, compromising their modesty and risking shame, or waiting until dark to cling to their dignity but risk their personal safety. A 2005 UN development programme report confirmed that the need to travel further from home to secure the family’s water can expose women and girls to sexual harassment and rape, which can also happen when women who lack safe nearby sanitation move about at night in search of privacy. It is estimated that women and girls in developing countries spend 97 billion hours each year searching for a place to go to the toilet—more than double the total hours worked every year by the entire UK labour force. An 18-year-old mother from Mozambique has described her arduous journey each day to defecate in the bush. Her ordeal involves crossing a dangerous bridge that has claimed the lives of many people who have fallen through it. Sometimes she feels so ashamed that she returns home without being able to reach the point she needs to reach, or she waits until dark to go, so that no one will see her. However, at night the journey is even more dangerous. A woman and a boy have been stabbed to death on that bridge, and one woman she knows of has been raped on the journey.
	Even where public latrines are available, provision is rarely adequate. In the Kifumbira slum in Kampala, there are only four toilets for every 2,000 people, these consisting merely of holes into a cesspit, covered in faeces and maggots. Women worldwide have reported incidents of men hiding in public latrines at night, waiting to rob or assault those who enter them. In two slum districts in India, women reported incidents of girls under 10 being raped while on their way to use public toilets. In work carried out by WaterAid in Bhopal in India, 94% of the women interviewed said they had faced violence or harassment when going in search of a toilet, and more than a third had been physically assaulted. Amnesty International has also reported that women and girls in the slums of Nairobi were staying away from communal toilet facilities at night because of their fear of physical violence and rape. A WaterAid poll of women in Lagos in Nigeria revealed that 67% of women interviewed said they did not feel safe using a shared or community toilet in a public place.
	The only alternative for those women—if it could be called that—is to defecate at home. However, that too carries huge health risks and social consequences. One woman living in Kampala in Uganda has said that
	“when someone knows you defecate in your house, your household is hated and people”
	will not visit. In addition to the stigma attached to this choice, resorting to so-called “flying toilets”—plastic bags or buckets used at home—carries significant health risks, not only for the woman but for her family, as storing and disposing of waste and maintaining even basic hygiene is almost impossible. Women are more susceptible to urinary tract infections and dehydration by trying to limit going to the bathroom for long periods and drinking less water over the course of the day, and as a result are more likely to become seriously ill.
	Further, as women are generally responsible for the disposal of human waste when provision is inadequate and for caring for others in the family who are affected by communicable hygiene-related diseases, they are more exposed to diseases such as dysentery and cholera than their male counterparts. This caring role and enhanced risk of contracting disease significantly restricts the degree to which women can be economically active and financially independent, and provide for the most basic needs of their family. That compounds the effect that a lack of provision of proper and private sanitation facilities has on girls’ ability to access education, particularly as they reach puberty.
	Having outlined the problem, I want to turn my attention in the time remaining to the progress being made towards achieving millennium development goal 7, target 10—halving the proportion of people without sustainable access to safe drinking water and improved sanitation by 2015. Although we have met the target of halving the proportion of people without access to improved sources of water, the sanitation target is significantly off track. At the current rate of progress, it will be over 25 years before south Asia meets its sanitation MDG target and 70 years to achieve universal access. Even more starkly, it will be the 23rd century before sub-Saharan Africa meets its sanitation MDG target and 350 years before universal access is achieved. The failure to meet the water and sanitation target threatens the progress of many other millennium development goals and undermines wider development efforts. Without water and sanitation, nothing else really works.
	I welcomed the UK Government’s commitment in April 2012 to double, to 60 million, the number of people whom they plan to reach with water, sanitation and hygiene promotion by 2015. I remain concerned, however, at the lack of clarity as to how the Government intend to ensure that that commitment will effectively target the areas and the people in the greatest need and as to how DFID will effect delivery on this scale through DFID’s current WASH budget.
	Good governance and stewardship of international assistance by foreign Governments also remains a challenge to the effective implementation of the Government’s plans—a matter to which I am sensitive. For example, the freezing of international assistance to Uganda due to the risk of corruption will mean that people living in the slums of Kampala who have benefited from DFID projects will see no further improvement in their circumstances in the short term. Urgent consideration must therefore be given to how the most needy can be targeted on the ground, even in the most volatile and unstable regions, and to how this increased commitment can be accompanied by an increased number of advisers
	dedicated to WASH, in order to maximise the impact and value for money of WASH sector support. I believe that the UK should take the lead on this issue, encouraging multilateral partners—particularly the World Bank, the European Community and the African Development Bank—to increase investment and to better target WASH investments.
	I believe that this is the time to give consideration to how the current trends will be addressed after the millennium development goals have expired in 2015. If present trends continue, 2.4 billion people will still lack access to safe sanitation facilities in 2015, so it is imperative to construct a post-2015 goal framework to include a commitment to universal access to basic water and sanitation services, including a specific target date of 2030. I also believe that post-2015 goals should better reflect the central importance of WASH to human health, education, welfare, economic productivity and gender equality, as well as reflecting the interdependence of those goals. Water, sanitation and hygiene targets and indicators must focus explicitly on reducing inequalities by targeting resources at poor and disadvantaged groups as a top priority.
	The United Nations human development report estimates that for every £1 invested in this sector, £8 is returned in saved time, increased productivity and reduced health costs. It is therefore a wise investment as well as a necessary one, and its impact can be multiplied if the Government also collaborate with non-governmental organisations and charities, as well as with Governments, who can assist in providing education to local communities through church and community networks and supporting increased capacity among state and non-state players.
	I therefore urge the Department for International Development to outline how it will achieve its commitment to improve WASH for 60 million people in its budget, how it will ensure that the neediest can be prioritised, even in volatile and difficult countries, and how it will take the lead in framing the goals for the post-2015 agenda and ensure that a goal for universal access to basic water and sanitation services remains a key priority.

Jim Dobbin: I congratulate the hon. Member for Belfast East (Naomi Long) on choosing this subject for the debate. I should also like to thank the Minister, who I am sure has okayed my contribution this evening.

Alan Duncan: Of course.

Jim Dobbin: I speak as the co-chair of the all-party parliamentary group on child health and vaccine preventable diseases. The other co-chair is Lord Avebury. I tabled an early-day motion recently on this subject, and it now has quite a number of signatures. I am also vice-chairman of the Council of Europe public health committee.
	Diarrhoea is the most common cause of childhood illness and kills about 760,000 children each year. Around 90% of those deaths are caused by a lack of access to safe water, adequate sanitation and hygiene. Those deaths are preventable. Vaccines against rotavirus, the most common and severe diarrhoea in children, are critical, and their availability is a major development in public
	health. However, those vaccines should not be seen as a silver bullet for tackling diarrhoea; nor can they address the other health impacts of a lack of sanitation.
	Reducing deaths from the top killers of children requires the prioritisation of interventions across different sectors, including health, nutrition, hygiene, water and sanitation. We must apply the package of prevention and treatment solutions that we know to be effective, and this must be built on solid collaboration between health systems and the water and sanitation sector.
	This was reinforced last year when I visited health care facilities in Bangladesh and Kenya, where we were launching a programme of vaccination. I witnessed extremely successful vaccination programmes in both countries, which were helping to protect children against terrible diseases such as pneumonia. During my visit, however, I was struck by the poor levels of basic sanitation and access to clean water at many of the health care facilities we visited. This emphasised to me how important it is to ensure that preventive measures such as vaccines are coupled with improvements in sanitation and access to clean water.
	I also saw on these visits small wards packed with up to 25 children, with the mothers in the same ward. I saw three babies in one incubator, and I saw a single oxygen cylinder with five or six lines coming out of it. It is all the basic stuff that is missing there. The vaccination was great—it is absolutely superb—and the efforts of the medics and nursing staff in each of these hospitals was just brilliant. The common basic hygiene and sanitation, however, are just not there.
	It so happens that I will be in Geneva tomorrow with the Earl of Dundee, who is the chairman of my Council of Europe committee. We are going to be in discussions with the World Health Organisation, UNESCO and the Global Alliance for Vaccines and Immunisation. The issue of sanitation is one that we want to raise, because this is a global problem that needs to be tackled globally. I wanted to make only a short contribution; I will be interested to hear the Minister’s response.

Alan Duncan: I thank the hon. Member for Belfast East (Naomi Long)for calling what I think is the second debate this year on this important issue. Making progress on the appalling world statistics on access to sanitation is vital to the health and well-being of poor people. I commend the hon. Lady for her efforts on this topic. If I may put it this way, I think she has become one of Parliaments supreme champions—if not Parliament’s main champion—on this issue.
	It is truly shocking that in 2010, 2.5 billion people—nearly 40% of the global population—remained without access to the improved sanitation that would have protected their health. Even more shocking is the fact that 1.1 billion people have no form of toilet at all. This is why the UK Government have given sanitation such a high priority. The previous Secretary of State announced in April this year that the UK would increase its ambition and reach 60 million people with sustainable access to water, sanitation and hygiene. As I said in my speech in March, providing these services is the bread and butter of development. I have seen for myself in my visits to countries such as Yemen and Bangladesh, which the hon. Member for
	Heywood and Middleton (Jim Dobbin) has mentioned, how effective DFID sanitation programmes are on the ground.

Russell Brown: On the commitment given back in April, I appreciate that we are just six or seven months on, but is the Minister in any position at all to tell us what progress has been made towards that 60 million target in 2015? Is progress really being made?

Alan Duncan: Since the announcement was made only recently, it is probably a little premature to report on progress because results come after the investment has been made in the area, but I undertake to keep the hon. Gentleman and the House fully informed of our progress. Through debates such as this, we will continue to treat this as a highly important topic.
	We know the enormous impact that the lack of a basic toilet has on people’s health and livelihoods. People who do not have adequate sanitation are far more likely to get sick than those who do, and it is often young children who suffer the most. The World Health Organisation estimates that up to 2.4 million deaths could be avoided each and every year simply by providing good sanitation, safe water and good basic hygiene.
	Poor sanitation does not only cause sickness. As the hon. Lady pointed out, women who lack toilets are at a much higher risk of sexual and other violence as they try to find secluded and private places. Without a decent toilet, women and girls cannot manage their menstrual periods privately and with dignity. Having nowhere to safely clean and dry their rags can lead to reproductive tract infections, which can be the most horrid things.
	We know from the United Kingdom’s own history the importance of sanitation to the economy and health of our people. This very Chamber was closed during the “great stink” of 1858. Not long afterwards, improvement in the treatment of London’s sewage led to a great improvement in the health of our capital city. We also know from the World Bank that providing sanitation in poor countries will deliver broader economic benefits, and will mean that such countries do not suffer unnecessary economic losses. It has been estimated that countries lacking widespread access to sanitation lose between 1% and as much as 9% of their GDP every year.
	The world is frequently faced with natural disasters. Last month, we saw Hurricane Sandy wreak havoc in the Caribbean before hitting the eastern seaboard of the United States. Floods, in particular, lead to disease because people have to live with dirty flood waters containing pathogens from waste that has not been disposed of. That is what leads to devastating epidemics of cholera and other diseases. Good sanitation is essential to reducing the unacceptable human cost of such disasters. It can be critical in helping communities to rebuild themselves more quickly after floods. Work supported by the Department for International Development during the 2010 floods in Pakistan showed that sanitation could really help a community to recover.
	How can we start to tackle the huge unmet needs for sanitation? Well, we can start by listening to women. Sanitation is important to them, often much more important than it is to men. One study in Indonesia found that, in urban communities, women listed sanitation
	as their second priority for improving their communities—after improved job opportunities—while men ranked it seventh.
	We need to foster and respond to demand. A latrine that is wanted is one that will be used and maintained. Approaches based on demand, such as a programme called Community-Led Total Sanitation, are proving very effective in ensuring the uptake of sanitation. We also need to keep sanitation simple. Expensive and water-hungry sewerage systems are not the answer if we want to improve sanitation for poor people. Simple technologies, such as pit latrines, are affordable and effective ways of providing the safe sanitation that we want to see.
	As was mentioned by the hon. Member for Dumfries and Galloway (Mr Brown), the United Kingdom’s ambition is for 60 million people to have sustainable access to water, sanitation and hygiene in the countries that are furthest from meeting the millennium development goal. We have a strong track record of supporting those basic services. A portfolio review of water, sanitation and hygiene projects supported by DFID showed that UK aid in the sector was well targeted at the poorest.
	The principal means by which the UK will meet our target of 60 million people is through programmes developed and managed by our offices in African and Asian countries. We currently have sanitation and water programmes in 15 countries. We are looking into how we can expand our existing programmes, and have already identified additional results that could be achieved in Ethiopia, Liberia, Sierra Leone, Tanzania and Zimbabwe. That builds on the successful experience of our country programmes. For example, our support in Bangladesh through UNICEF has reached more than 30 million of the poorest people in that country. We are continuing our support in Bangladesh by working through BRAC, a major national non-governmental organisation with a good record of helping the poorest. The Department also funds programmes to deliver improved sanitation through other interventions. For instance, in Yemen we are funding a nutrition programme, implemented by UNICEF, which will provide sanitation in 300 schools and benefit nearly 250,000 children.
	We will achieve those results through a number of partnerships with organisations such as the Water and Sanitation Program, Water and Sanitation for the Urban Poor, and WaterAid. To complement those activities, we have been exploring the potential of new programmes
	to reach more people who currently lack access to sanitation, in more countries, through partnerships with the UN, civil society and the private sector.
	In response to the hon. Member for Heywood and Middleton, the UK Government are the leading donor of the Global Alliance for Vaccines and Immunisation, which delivers new and underused vaccines to the world’s poorest countries. UK support alone will vaccinate 80 million children and save 1.4 million lives by 2015. GAVI will roll out the rotavirus vaccine as part of its programme, protecting against diarrhoea which, as the hon. Gentleman said, is one of the leading child killers in the world, accounting for 450,000 deaths each year. With UK support, GAVI plans to help the vaccination against rotavirus of up to 50 million children in at least 40 of the world’s poorest countries by 2015.
	We need solid evidence to underpin our investments, and to that end the Department for International Development is funding key research programmes to improve our evidence base. The sanitation and hygiene applied research for equity programme is developing new and robust evidence on the benefits of sanitation, and on how sanitation and hygiene behaviours can be improved most effectively. The Department has started a new programme of operational research to improve value for money and efficiency in our programmes. As part of that, we will test and evaluate innovative ways of providing sanitation services to poor people in urban areas, in partnership with the Bill and Melinda Gates Foundation.
	Support for sanitation is also about creating the right incentives for Governments to mobilise their own resources. In June this year, the UK Government sent a strong message of our political commitment with the recognition of the right to sanitation. The Government will place an emphasis on the delivery of basic sanitation services to poor people in the long term. We will continue to invest in programmes to provide sanitation, and use the Sanitation and Water for All partnership to encourage other donors, Governments in developing countries, and civil society to do the same.
	I say to you, Madam Deputy Speaker, all hon. Members, and in particular the hon. Member for Belfast East who initiated this debate, that the Government will do their utmost in this area. I hope that Members of the House will continue to support us in that essential work.
	Question put and agreed to.
	House adjourned.